Loblaw Companies Ltd (L.TO)

Grocery business is extremely competitive. He'd rather focus on Costco, Walmart, Amazon through Whole Foods. Private label investment putting pressure on margins plus its unionized workforce have been headwinds. 15x earnings for a 5% growth rate is not compelling at this part of the cycle.

He just added to his position around $62. He doesn't understand how it fell that low. It's a great business and enjoys an oligopoly in Canada. They reached same-store sales growth last year that will likely taper off as people eat in restaurants more. Food inflation will benefit the grocers. It's in a stable, safe business. The PE is fair. Empire has performed the best in this group, while Metro is managed well and steady. Loblaw has lagged, but is the most undervalued and offers the best value.

WN-T vs. L-T This sector is just not loved right now. Investors just aren't looking at these kinds of stocks right now. Their costs have been moving up but people aren't eating more. Their sweet spot is late April until late May. L-T could be okay so he would hold on to it.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A nice stable stock with a secure dividend. Although it may only show slow growth, it is a defensive play in case of volatility and downturn. Unlock Premium - Try 5i Free

Stock's underperformed for a while. Prefers Costco to all the food retailers. Not a big buyer of consumer staples right now. In a recovery, you want to focus on cyclicals. Covid costs have hit grocery stores.

L vs. WN A bit like splitting hairs. Weston controls Loblaw. When you buy Weston, you get 95% Loblaw and 5% bakery. A great business. A buy and hold through the cycles. If you get a rip roaring cyclical market, it will probably lag. High single digit or low double digit return. He doesn't like the bakery, so Loblaw gets the nod.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The stock remains at a lower range. Investors may believe it has benefited strongly from the pandemic, thus future growth will be slower than recent growth. It is still a solid company and decent investment. Likes it for safety, stability and some growth. Unlock Premium - Try 5i Free

Trading in a jittery way for some years. Has let go technical support of $70. Makes him nervous. He's switch to Weston, as that's near its 10-year valuation low, with good upside potential. Weston is safer.