Opinions
Laura Wallace
Loblaw Companies Ltd
L-T
BUY
Feb 07, 2013
Stock price when the opinion was issued
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Wait for a pullback, given current highs. As Canada's economy softens, more shoppers spend at their discount banners. Shoppers are doing very well in beauty goods as they get out of the low-margin electronics; many provinces are allowing pharmacists to expand their role, which is another tailwind for Shoppers Drug Mart (that Loblaw owns). They are expanding their margins and guiding higher.
Has held in remarkably well; considered a defensive name when markets turn volatile with risk of economic slowdown. Traffic gravitated to its discount banners. Pharmacists' roles have expanded at SDM, which also helps drive traffic. Plans to open more pharmacy-based clinics across Canada. Executing very well. Not inexpensive at 22x forward PE, wait for a pullback.
Weston is the parent of Loblaw’s. She prefers the pure plays and L-T is the pure play. They are unlocking the value in their real estate and that is giving a kick to the stock. She is concerned about what Target will do to the landscape and to L-T. She thinks it is a fairly safe company although not going to provide a great return. She would not be opposed to taking a little profit here. We do know Target will be launching this year with aggressive pricing strategies.