Metro Inc (A) (MRU.TO)

Being in defensive stocks (consumer staples) is a good place now; can weather a recession. Grocers are investing heavily in home delivery considering Amazon, and spinning out real estate units. It's good to see competition in this space, for consumers. MRU has been doing a good job, gaining a little market share. He owns Weston instead.

MRU-T vs. L-T. He has owned both in the last three years. Earnings were down 3% for MRU-T even though sales were up. L-T is facing the same problems. There are overall challenges in the whole group.

If we have a tough year next year, this is a defensive name. They bought Jean Coutu and it is the best management in the retail space. (Analysts’ price target is $45.00)

From 2016 to early-2017, their chart had an uptrend. Since then, it's been sideways. Either buy at the bottom of this range and trade the range, or wait for a breakout. It has been underperforming the TSX, too.

He does not own anything in this space. The company is well run, but finds the business difficult with constant pressure on margins on several fronts. If it had a 5% dividend it might make sense to own and hold. There is better choices out there.

It is a seasonal stock. It is a great trading stock. It is going to come into a lid in the mid to high $40s. It has a good potential to get into the $45-$47 area and he would get out of the trade after that.

(A Top Pick March 15, 2017 Down 3.4%) He still believes this is a well-run company. They sold some of the position during a recent rally. Competition has heated up especially with home delivery and he will size his position accordingly.

Produces about 3% free cash flow yield, which translates into $287 million worth of free cash flow over the last 12 months. Trades at 0.9 Enterprise Value to Trailing Sales, versus 6% year-over-year sales growth, so the EV to sales to sales growth is .15 which is a C+ compared to the database. Dividend yield of 1.6%. (Analysts’ price target is $46.)

There are two equal and offsetting forces. They just made a large acquisition, taking them off their main strategy. It looks like it will be accretive. He likes the deal. The offsetting headwind is the incursion of AMZN-Q into grocery. He thinks this is overdone. Whole foods does not have that big a presence in Canada.

Selling their Couche-Tard shares and buying Jean Coutu (PJC.A-T). Amazon (AMZN-Q) is entering the market with their purchase of Whole Foods. A very competitive space now. Besides the issue of having price competitiveness, you also have the minimum wage situation coming.