Empire Company (A) (EMP.A.TO)

He has owned it in the past. They had a good run and a year ago put in a plan to cut costs from their business. They have razor thin margins. It is a very competitive business. He does not like to buy these kinds of businesses. EMP-T also has CCR.UN-T REIT but you are in an industry that is so highly competitive with AMZN-Q and so on that it is hard to own it at this price.

Numbers are vastly improved. He tries to stay away from retail, especially food retail. Now in a period where tariffs are being tossed around. Has had a nice recovery, but leery of buying now. Good company, well managed, but can’t get enthused.

(Past Top Pick on January 26, 2018, Down 0.4%) He believes this will do well. Since last September, it's seen an up channel. He continues to prefer this over the other Canadian grocers. Good management with a program to expand revenue in the next three years. He doesn't fear a challenge from online grocery shopping--he wants to feel tomatoes before he buys them.

He has a price target of $30 on this and the fair market value is only about $32. Despite the turnaround in this company it has not created a tremendous amount of value. It has a strong technical resistance point about two times book value.

This company owns Sobeys’, who acquired Safeway. They have turned things around and “Project Sunrise” is working to centralize things. Same-store traffic and margins are improving. They are doing very well in a very competitive sector. The stock now has momentum. Yield 1.7%. (Analysts’ price target is $28.28 )

A turnaround story. Groceries is a tough business. Sobey's has new management and more centralized control, along with cost cutting. (Analysts' price target is $28.)

A year ago they went through a restructuring and then a big acquisition in Safeway. They were left with a banner that had few discount brands in Western Canada, then tinkered with their loyalty program and that upset consumers. Last quarter the results were not liked. He used to have it but now prefers WN-T or L-T.

This has been acting quite well recently, and doesn't know if this is a bottom or a top. It’s a good company. They made a mess of their acquisition in Alberta and have a plan to fix things. The multiple is extremely high. There’s been a lot of anticipation that this turnaround is going to happen more quickly than he thinks is possible. Looking into 2018 the stock looks fully priced. He isn’t a fan of the grocery business. Wait to see how well they do in turning things around in Alberta.

This has rebounded quite nicely off the low, and are showing signs that the turnaround is working. Whether to buy it today is a very tricky decision. He doesn’t think you can understate the impact of the on-line threat. They are dealing with razor thin margins, so what happens when they start shipping out their groceries at $10 a box. He would stay away from the whole group.

It seems as though the turnaround story is taking hold. The Canadian grocery space is a tough place to be. Pricing is competitive. They have issues with Amazon (AMZN-Q) digging deeper and deeper into the grocery space. Minimum wages are going up across the board. On a relative basis, this looks as good as any.

This is a turnaround in the food business. The acquisition was bad and they did not understand what they were getting. They brought in new management with a new way of looking at it. (Analysts’ target: $27.50).

Loblaw (L-T), Empire (EMP.A-T) or Metro (MRU-T)? Loblaw has proven to be the best run grocer in Canada. This company has had its challenges but under the new CEO, it is showing that it is starting to come back. If you are a turnaround person, even though it has had a big run already, it is starting to outperform off a very bad low, and has the most turnaround potential.

This has come up with a plan which encouraged the market, but he feels the market has gotten a little ahead of itself. He hasn’t quite seen how the plan is going to impact them and work on a long-term basis. He would tend to be on the sidelines for a while.

Sell because of the Amazon-Whole Foods deal? There are only 11 or 13 Whole Foods stores in Canada. Empire has its own problems in fixing Safeway in Western Canada. When Amazon announced the deal, Canadian stocks dropped 3%-5%. It will take a few years for Amazon to roll out their US stores. If he were forced to own one food store in Canada, it would be Loblaw’s (L-T).

Had owned this for a long time, but is frightened at what is going to happen with the grocery space. There are a couple of European grocery chains that have come into the US, that have phenomenal low prices and terrific stores. It is only a matter of time until they come to Canada. When you walk through Sobey’s stores, they are not up to snuff.