Metro Inc (A) (MRU.TO)

This has good price momentum, a valuation that is quite compelling and is a nice stable consumers staple stock. Good ROE of about 20%. Dividend yield of 1.2%.

Chart shows a classic stair step pattern. He likes stocks that run up, take a little bit of consolidation, and then start to run up again.

This scores in the top 10% for him. Valuation is great and is in the top 15%. A low volatility stock. ROE is 20%. It is defensive in nature. Pays a small dividend.

Trading around its market multiple on earnings, so is pretty comfortable with it. It also has a low debt level and good interest coverage. For uncertain times, this is a nice stable area where you won’t see a huge amount of fluctuation in their revenue or earnings. 1.36% dividend yield.

It went through a great deal of turmoil. It is a great run business and safe. You need to keep in mind food inflation. Most food comes in US dollars and the increased cost is passed on to consumers. This is one of the better names.

A supermarket company and one thing supermarkets like is food inflation. With a falling dollar, you are getting food inflation starting to come in because a lot of fruits and vegetables are imported. This should benefit along with the other supermarkets.

Has been a huge winner for decades. A well-managed company in a very competitive market. Great, long term hold, except that it is very expensive today. This is the type of thing you want to buy on weakness.

The whole supermarket sector has been doing quite well in Canada. Consumer staples tend to do well all the way through to October. This is a low volatile way to play the market.

Likes grocery retail. The consumer is going to benefit from lower energy prices and perhaps spend a little bit more on the grocery segment. Square footage growth, which is quite a concern a couple of years ago, has moderated. (See Top Picks.)

Non-food retailers have done better than food retailers, but he would rather own L-T than MRU-T because it has lagged and the Shopper’s acquisition will prove quite profitable for them.

A great company. Has owned this in the past, but he is an active manager and his clients pay him to pick the best companies, so he has stuck with Empire (EMP.A-T). The 3 grocery chains, including Loblaw’s (L-T) have all been great performers over the past couple of years. 1.2% dividend yield.

All of the grocery chains have done very well. He prefers Empire (EMP.A-T) because it has a couple of catalysts. They have Safeway which has synergies still coming, and the valuation is the cheapest.

We have seen great performance out of the consumer staples lately, and this is no exception. They still have a very good dividend yield. Latest quarter was quite strong and they announced a 3 for 1 stock split. They also increased the dividend. If he owned, he would be looking as to where he would start taking profits. Multiples are getting fairly pricey.

These types of names have gotten to frothy levels, but on an overall basis, they are not super expensive. They still trade at a below market multiple. There is still growing competition with a lot of ethnic grocery chains popping up. Market share is shrinking for these guys, but they are wonderful operators.

Empire Company (EMP.A-T) or Metro (MRU-T)? He prefers Empire Company, but feels the grocery business is going to be very challenged for the next 12-18 months. There has been some price competition. There certainly has been a lot of new supply get built. Growth exceeds consumption growth which puts pressure on pricing.