Metro Inc (A) (MRU.TO)

Not much of a yield. He is worried about the sector since he saw the Empire numbers last week. Sector will be under margin pressure for a while. Negatively impacted by Canadian dollar going down. Would prefer L-T because of Shoppers acquisition.

A very well managed business. Did a few big deals in past years to become one of the bigger players. The problem right now is that the Canadian grocery space is pretty tough ever since Wal-Mart entered. A lot of grocers have been offsetting this by consolidations but this company hasn’t done anything lately.

Grocery business is one of the most defensive businesses that you can have. Unfortunately, they are being attacked on all fronts. Highly competitive. Also, there has been no food inflation. These stores are struggling but are making good with cost-cutting and improving their distribution network. This is a wonderful company. You could also buy Empire (EMP.A-T) which is now a pure play grocery store and is not trading anywhere near the multiples that Loblaws (L-T) or Metro is.

The whole grocery space is a highly competitive market right now with Target come in and focusing on fresh. The stock has corrected, so you might want to hold on for a bit longer or take some profits.

Looking at the whole food industry in Canada, we have problems with Target (TGT-N), Wal-Mart (WMT-N) as well as companies like this. This one kind of got left out with the Shoppers (SC-T), Sobeys (SBY-T), Loblaw’s (L-T), etc. and there was nothing left for this company. They have now decided to close some stores and revamp some others. Something has to be done. Would much prefer Loblaws.

He would not be an owner of this one. They have squeezed everything out of that lemon. Margins are very fat and he would be Selling and buying Loblaws (L-T) instead.

(Market Call Minute.) Has done well in the past. May be looking to add an acquisition if there is anything left to buy and that would probably take the stock down for a while.

(Market Call Minute.) Great operator but competition is heating up.

(Market call minute.) Just made a deal with Target (TGT-N) for their pharmacies. Thinks their acquisitions of late are going to reduce their free cash flow, which was always a strong sign for this company.

(Market Call Minute) Loblaws acquiring shoppers has implications for them. Going to be tough sledding.

Very good company. Have done a fantastic job. He would prefer to look up the more beaten up one, Loblaws (L-T). The Canadian grocery store sector is difficult because of competition.