Loblaw Companies Ltd (L.TO)

(A Top Pick May 18/16. Up 14%.) She likes the food retail and the drug retail. They have great locations. A lot of their Shoppers outlets are offering fresh food, which is a good concept in the urban centres.

The program was interupted by a news flash from Washington, and wasn't inished. Top Picks are not talked about today.

This will probably be another distribution hub for marijuana at some time. He suspects it would have a very small impact on the stock. Thinks there are better opportunities elsewhere.

A consumer staples name which is in the defensive space. He is completely underweight the area. It has just moved up and down over the past 12 months or so, and has really been quite sideways. Shares are trading at 16X forward earnings with a 10% growth rate, trading in line with historical valuations. With food deflation and lower prices in a very highly competitive industry, this is a name he would not be rushing out to buy. It could face a potential slowdown in sales growth. Shoppers is working well for them, but not enough to push the shares higher in an environment where cyclical stocks are doing well.

Historically this has been a summer stock. Normally it starts to do well at approximately the middle of June right through until the end of September. It’s in a trading range right now and not doing much of anything. If you see this moving above its trading range by the middle of June, that is going to be the set up for the next seasonal trade, which will take you into September. Dividend yield of 1.5%.

An interesting name. Recently they have kind of listened to the consumer, and started to be more competitive on pricing. Being in the consumer staples space is a reason why he doesn’t like this as a name in the portfolio. However, compared to some of the other food retailers, he likes it, especially with its diversification into Shoppers Drug Mart, which is a much higher margin business.

Has never been a fan of the food industry. However, if you want a relatively safe stock and a company that is doing reasonably well right now, this is a good place to put your money.

A consumer staple on the Canadian side. Seasonally, they are typically better to own in the summer. Not for the “buy and hold” investor, this is a stock for the trader, Buy at $60 and Sell at around $70.

He owns this through George Weston (WN-T) which also has the bakery business in the US. The stock has pulled back to the $67-$68 price range. You are seeing a reflection of the environment that grocery stores are finding themselves in. A very, very competitive environment. Consumers have been going more and more into lower priced stores. There is an inability for them to pass on price inflation. For the time being, we may see some margin compression. Over the last number of years the company has successfully put in a new SAP system, revamped their supply chain and did some management restructuring. He would look at this as a premier player in the Canadian grocery market.

(A Top Pick Dec 3/15. Up 7.24%.) He took profits on this a while ago. Being in the consumer staples space, he doesn’t pay attention to this particular area. He does like this stock.

Competition is fierce, but in terms of square footage growth, it has moderated from prior years. Loblaw owns Shopper Drugs as well, and she likes the drug retail. Also they both have the best locations. The company has gone through a period where they introduced new IT systems, refurbished larger stores, and are seeing the benefit of that flow through now.

Has a very small position in this. A well-managed company. The Shoppers acquisition is going along very well. Typically, these food retail companies do very well when inflation is going up, so if we get a rise in inflation in the next couple of years, it will be good for them. However, money is coming out of consumer stocks and going into the more commodity oriented stocks.

He owns both L-T and WN-T. They have done a great job of being more efficient and integrating Shoppers. They generate a healthy amount of cash. It is not dirt cheap, but you can get it at an attractive price. Buy it and leave it.

Long-term hold? He is not enthused about the industry. It had some good market moves when people were looking for safe places, but the competition is fierce. Everybody is getting into this field. It is such a thin margin business and so competitive that he would rather go elsewhere.

The largest food and drug retailer in Canada. The stock has come off a lot. Rebounded very recently. The concerns regarding food price deflation are a little overdone, in that they are somewhat self-inflicted. This company lowered prices to try to be a little bit more competitive, and are going to start to demand concessions from some of their suppliers which should stabilize things. They generate a substantial amount of free cash flow. Dividend yield of 1.5%. (Analysts’ price target is $79.31.)