Stock price when the opinion was issued
Remarkable sprint for a grocer and drugstore, executing well on both. Benefited from discount banners. Higher margins on strong private label portfolio. SDM is doing very well, same-store sales going up, pharmacies expanding scope of service -- increases revenue and foot traffic. Wait for a pullback to enter.
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.
Defensive consumer staple going into economic slowdown. Over half of food banners are in discount, seeing increased traffic. Plus, more people are cooking at home rather than eating out. SDM has great locations, offers Loblaw products; pharmacists expanding roles, and this increases general traffic. Yield is 1.45%.
(Analysts’ price target is $135.40)