
TSE:MRU
This summary was created by AI, based on 5 opinions in the last 12 months.
Metro Inc (MRU-T) operates in a competitive grocery market in Canada, where larger players like Costco and Walmart have dominated growth, forcing Metro and its peers to carve out niche markets that these giants can't fully exploit, such as discount banners and private-label products. The grocery sector is under pressure from public scrutiny over pricing, compounded by inflation and rising energy costs, which affects perception and sales. Although Metro Inc remains a solid player, significant growth prospects appear limited. Experts express a preference for Loblaw due to its market dominance, although there are insights into the potential of discount grocers like Food Basics. One analyst noted Metro was a top pick earlier, showcasing strong institutional buying signals and a defensive investment strategy, indicating ongoing interest despite the challenging market environment.
MRU-T vs. EMP.A-T. Metro has been his favourite grocery stock for 15 years. Grocery are the stay-at-home stocks but as we exit the pandemic this is not where you want to be. Don’t buy until the rotation is completed.
He has been a fan for 15 years but regrets not buying it. It has run up more than Loblaws so he would not get it now. Wait for a rotation out of grocery stocks and then at that point he would prefer this one to L-T.
You want defensive stocks right now. Big thing is Jean Coutu, and integration will create earnings and cash flow growth. More difficult issue is how to expand that brand beyond Quebec, and this is already priced into the stock. A defensive name, and you can do quite well. Yield is 1.7%.
He would prefer it over L-T and EMP-T. It has been the better performer over the last 10 years. Their long term strategy has been to buy back 3-5% of their stock, pay a 2% dividend, and increase their net income 5-10% per year making about a 10-17% return. As a grocery stock it has never become quite compelling enough but in hindsight it would have been a good investment. Once they get too large they just have less growth opportunities. This one is more nimble. It's valuation is on the higher end of the range so wait for a pull back.
The big grocers have done well. Surprising, because competition is coming from Amazon and even Shoppers Drug Mart with automation. Grocers are a low-margin business. Grocery stocks have run up, so take some profits.