Opinions
David Baskin
Empire Company (A)
EMP.A-T
COMMENT
Jul 14, 2014
Stock price when the opinion was issued
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Nice support level was momentarily cracked, which would have scared people like him if he were holding the stock. Recovered, fantastic news. Look at next levels of resistance, around $38. If that breaks, you'll get into old resistance levels of $41-42, and there's a decent chance of this. Looks OK, 7/10.
The black sheep of Canada's big three grocers, but recent results were pretty good and that's raised the stock. Are improving costs and being more efficient. Same-store sales growth is flat, though. They lack a discount brand like Metro and Loblaw, and lack presence in pharmacies. That's why their PE is lower than their peers. Buy at $30-35, though. Well-managed, using technology well for deliveries.
This is the controller of Sobey’s stores. It also has a controlling interest in Crombie REIT, an owner of shopping centers across Canada. Sobey’s has recently taken over Safeway in Western Canada. The grocery business is a low margin, nickel/dime business. Very competitive. If you look through this company and try to value the assets, you will find that the value of the assets is higher than the stock price, $80-$90 a share. He thinks they have some synergies coming out of the Safeway acquisition. They are closing quite a few stores because of too much capacity and duplication. They’ll no doubt save a lot of money on logistics and administration. He sees increasing margins.