Investors tend to get excited when a company splits its stock. That may seem irrational since stock splits have no direct impact on fundamentals like revenue or valuation, but there is a thread of logic in that reaction. Stock splits are only necessary after significant share price appreciation, which itself hints at a strong underlying business.

With that in mind, Costco Wholesale (COST 1.01%) and MercadoLibre (MELI 3.09%) are prime candidates for stock splits given that their shares currently trade at $555 and $1,223, respectively. But both stocks are worth buying even if that doesn't happen. Here's why.

1. Costco Wholesale

Membership-based retailer Costco reported humdrum financial results in the most recent quarter as the broader retail industry continued to struggle with high inflation. Revenue rose just 2% to $53.6 billion, reflecting a 4.8% increase in store traffic offset by a 4.3% decrease in average ticket price, and earnings under generally accepted accounting principles (GAAP) declined 4% to $2.93 per diluted share. However, growth should reaccelerate as the economy improves.

The investment thesis centers on scale and brand authority. Costco is the third largest retailer in the world, and the company has earned a reputation for selling quality goods at bargain prices due to cost advantages arising from its scale and business model.

It added paid members at 6% annually over the last five years, and its membership renewal rate was 92.6% in the most recent quarter. That hints at brand authority and consumer loyalty, and investors can chalk those qualities up to operating expertise.

For instance, Costco carries just 4,000 stock keeping units (SKUs) on its shelves, far less than the 30,000 SKUs found at most supermarkets, forcing suppliers to compete on price for limited shelf space.

Costco will also make a product through its Kirkland Signature private label when the name brand is too expensive. Those generic products typically sell for 20% less, yet they earn higher margins.

Here's the bottom line: U.S. retail sales rose at 5% annually over the last decade, and a similar growth trajectory is likely in the next decade. But Costco has historically grown more quickly than the industry average due to its strong competitive position. Indeed, its revenue increased at 8.4% annually over the past decade, and investors can expect similar results in the future.

With that in mind, shares currently trade at 1.1 times sales, a slight premium to the three-year average of 1 times sales, but a reasonable price to pay for a high-quality business like Costco. Investors should buy a small position in this retail stock today, whether or not the company splits its shares in the future.

2. MercadoLibre

MercadoLibre reported phenomenal financial results in the first quarter despite battling economic headwinds like high inflation and unfavorable foreign exchange rates. Revenue increased 33% to $3 billion, reflecting strong growth in the commerce and fintech segments, and GAAP earnings skyrocketed 205% to $3.97 per diluted share as improved efficiency in marketing and logistics contributed to a 370-basis-point expansion in profit margin.

The company should be able to maintain that momentum in the coming years. MercadoLibre operates the largest e-commerce and digital payments ecosystem in Latin America. Its marketplace receives nearly four times more visitors than its closest competitor, and its market share is expected to reach 21.6% in 2023, up 70 basis points from 2022.

That scale underpins a powerful network effect. Merchants are strongly incentivized to participate in the marketplace due to its popularity with consumers, and each new merchant makes the marketplace a more compelling shopping destination for consumers.

MercadoLibre supercharges that network effect with adjacent services for payment processing, financing, logistics, and digital advertising. Those products make its marketplace an even more convenient option for merchants.

It takes a similar tack with consumer finance. Its subsidiary Mercado Pago is one of the most popular digital wallets in Latin America, and the company reinforces that popularity with adjacent products like asset management, credit cards, and consumer loans.

Here's the bottom line: Online retail sales in Latin America are expected to increase at 14% annually through 2027, and digital payments volume is expected to increase at 15% annually during the same time period, according to Statista.

MercadoLibre has a strong presence in both markets, and it has another large opportunity in digital advertising, so its revenue should grow much faster than the industry average for the foreseeable future.

Yet shares currently trade at 5.4 times sales, a bargain compared to the three-year average of 11.3. Investors should jump on that opportunity to buy this growth stock, whether or not the company splits its shares in the future.