Grocery stocks are great consumer staple stocks that are defensive in times of volatility, such as what we have seen in the past months. Metro has been hitting its 52-week high, as seen on our high list.
Big box stores such as Costco and Walmart are threatening the growth of grocery stores, as they create super centres that offer much more than just groceries and can sometimes offer better value. These companies are ramping up their grocery section and are looking into online as well. The minimum wage situation could also affect grocery stores negatively, since they run on pretty tight margins. Competition could cut revenues and leave grocery stores vulnerable. However, people have to eat and grocery stores aren’t going anywhere so this might be a good place to hide during stock market storms.
Couche-Tard, who’s weathered the sell-off, is growing its business and might threaten the classic grocery store with its convenience and availability. As a company that continually adds value to stockholders, this could be a good alternative buy.
Canadian groceries y drugstores
Metro is by far the best management team in the sector. It seems to go through these cycles. It is a good entry point to get it in at a bit of a lull.
All the grocers pulled back in the last quarter given higher competition which lowers product prices. Trades at 15x earnings. Can grow 8-10%. They have online delivery now. That said, studies show that people still prefer to go to stores to buy groceries. She also likes the Shoppers Drug Mart chain; their Optimum card program…
Earnings miss? She owns Loblaws instead of Empire, who just commented how competition is increasing. The recent stock pullback might just be a re-calibration of earnings metrics following the release of an earnings miss.
From $40 to $240 Million in sales in three years. 45% of the meal kit market. They recently announced they're positioning against the grocery market. They are being very smart about this. They are leveraging their platform to add to the food basket. They trade at a big discount. They just announced a reusable box…
Resistance at $28. He predicts a general market pullback in January of 5-10%. This will return to $27. Wait. But if it breaks below $23, it will head lower.
These companies are a threat:
Well-run, integrating stores and online well. If the economy weakens, it will benefit Walmart. Same-store sales and e-sales are doing well, but the valuation has grown high. Buy on pullback. WMT have been diligent going online and has held up to Amazon.
It's had a great run in 2019, but is now poised for a correction of 5-10%. He predicts a general market pullback in January. Support at $260 and $280; the stock will return to these levels. You can take profits now and buyback later. Wait for that correction.
It's done well long-term and is a great acquirer of assets. After buying businesses in North America, they now want to expand internationally. But there are better growth stocks outside Canada. Maybe buy on a pullback. It's a good, long-term growth stock though.