Target (TGT -0.70%) didn't impress investors with its third-quarter numbers. However, Foolish investors know that the best path to sustainable profits is to look at the big picture. This doesn't necessarily mean Target's situation is appealing. Read on to find out if Target appears to be a quality long-term investment, and if Costco (COST 0.17%) or PriceSmart (PSMT -0.82%) is likely to offer more potential.

Target's comps underperform
Target's net sales increased 2% to $16.9 billion year over year in the third quarter, with comps increasing 0.9%. This was at the low end of guidance, but Target is operating in a difficult consumer environment, which makes any positive comps results look good. That said, Costco and PriceSmart have been much more impressive on a comps basis recently -- in the same consumer environment. We'll get to the primary reasons for these trends in a moment, but first take a look at those comps numbers.

Costco continues to impress
Costco's October net sales increased 6% to $8.15 billion, with comps improving 3%. Costco saw U.S. comps increase 4% and international comps grow at a 3% clip.

To give you an idea of what these numbers mean from a geographical perspective, Costco operates 642 warehouses, 457 of which are located in the United States. Therefore, the domestic numbers are very important. At the same time, international comps shouldn't be discounted, as they can be a good indicator of the company's international growth potential. Below is the geographical breakdown for Costco's warehouses:

  • United States and Puerto Rico: 457
  • Canada: 86
  • Mexico: 34
  • United Kingdom: 34
  • Japan: 18
  • Taiwan: 10
  • Korea: 9
  • Australia: 3

This geographic diversification is also important because it allows Costco to expand or divest based on a country's long-term economic outlook.

Getting back to comps results, if you look at a slightly larger picture such as the nine weeks ended Oct. 31, then comps still impressed, with overall comps showing a 3% improvement. U.S. comps improved 4% and international comps grew 1%.

It might surprise some readers to see a domestic retailer perform so well on a comps basis given the current economic environment, but Costco is primarily geared toward middle-class to high-end consumers. These consumers are less affected by the current economic malaise our country is seeing. This has a lot to do with stock and real estate appreciation.

As companies across all sectors are tepid about future economic growth, they're cutting costs (including employees) at a rapid rate and buying back stock. Translation: The money is often being used to drive stock prices higher. In addition to liquidity being pumped into the system and debt-fueled growth, this is a big part of the reason the stock market as a whole is being driven higher. The point here is that this trend benefits consumers who frequent Costco, which is good for Costco. 

A much smaller idea with big potential
I have written about PriceSmart (PSMT -0.82%) on several occasions recently. PriceSmart owns shopping warehouses in Latin America and the Caribbean. Like Costco, it has set itself up well for geographic diversification. Consider the warehouse location breakdown:

  • Costa Rica: 6
  • Panama: 4
  • Trinidad: 4
  • Guatemala: 3
  • Dominican Republic: 3
  • Colombia: 3
  • El Salvador: 3
  • Honduras: 2
  • Aruba: 1
  • Barbados: 1
  • Jamaica: 1
  • Nicaragua: 1
  • Virgin Islands: 1

PriceSmart is clearly a lot smaller than Costco, but it's looking to expand in Latin America, where many consumers are seeing wage growth.

In October, PriceSmart saw net warehouse club sales increase 13% to $195.4 million. For the two months ending Oct. 31, new warehouse club sales improved 12% to $380.7 million. October comps jumped 8.8%. Comps over the past two months grew 8.9%. 

There's no question that PriceSmart is growing. The only potential negative is valuation, with the stock trading at 43 times earnings. If any negative news were to surprise the Street, it could lead to a gap down. PriceSmart can't control this. Even if there is subpar stock performance around the corner, Foolish investors know to pay more attention to the underlying business, which appears to be very solid, with strong long-term potential.

The bottom line
It might seem as though Target should be disregarded as a potential investment option. However, Target is going through a transitional phase in Canada, which could lead to subpar short-term results. In the long run, it's likely to pay off, potentially in a big way. Target has a good chance of steamrolling smaller retailers throughout Canada, which will allow it to steal market share with ease.

Costco is a strong company all around, seeing consistent top-line growth and positive comps. Its broad geographic diversification should give it some resiliency to downside economic moves. At the same time, a pullback in domestic stock and real estate markets would have an impact, as many consumers would be affected. Traffic would likely remain similar, but spending would decline. Foolish investors know to invest for the long haul, in strong underlying businesses. When the stock of a top-notch company declines, there's always an opportunity to buy more.

As far as PriceSmart goes, it has tremendous potential, especially since it only has 32 warehouses and is situated in Latin America. The company's comps growth is a clear indication that it's heading in the right direction. Try finding a domestic discount retailer showing comps growth north of 8%. You might keep yourself busy for a while.