MENU

Fool Canada’s first 1,000%+ winner?

Our Chief Investment Advisor, Iain Butler, and a team of The Motley Fool’s most talented investors from across the globe recently embarked on an unprecedented mission:

To identify the 20 Canadian small-cap companies they believe have the best shot at earning investors like you gains of 1,000%+ over the coming years.

For the next few days only, you can get the names and full details on these 20 potential “10-baggers” when you join Iain and his team in a first-of-its-kind project they have dubbed Discovery Canada 2017.

1 Grocery Stock Deep-Value Investors Should Consider

Defensive stocks have been going out of favour lately thanks to a bullish vibe that has been going around since Trump won the election. Long-time bear Prem Watsa has eliminated a huge chunk of his short positions because he thinks the U.S. economy is getting stronger — a phenomenon that’s likely to make short positions a huge loser over the medium to long term.

The general public is also more bullish, and we’ve seen the transition of capital from defensive stocks into cyclical names, which would provide more upside with a strengthening U.S. economy.

Stocks have had a magnificent upward run, and it’s getting difficult to find value. But there is one sector that appears attractively valued right now, and that’s the defensive sector.

Grocery businesses such as Loblaw Companies Limited (TSX:L) are terrific defensive plays that investors should be loading up on while they’re out of favour with the general public. Sure, the Trump administration will give the bull new legs, but keep in mind that we’re in the very late stages of an old bull market. It’s important to have a defensive position to be prepared for the next stock market correction.

Could e-commerce giants penetrate Loblaw’s moat?

A well-run grocery business with a large footprint has a really wide moat. The average consumer is never too far away from their local grocery store, and the rising threat of e-commerce is unlikely to steal a huge amount of business.

You may be aware that Amazon.com, Inc. (NASDAQ:AMZN) has set its sights on the grocery business with its new AmazonFresh physical store and grocery delivery services. If you’re a shareholder of a grocery company, then it’s probably a reason to be worried, but here’s why you shouldn’t be.

Is “Click & Collect” the real future of grocery stores?

The management team at Loblaw is considering the future of grocery stores. They’ve considered the delivery model, but have decided to go with the “Click & Collect” model. I believe the Click & Collect model trumps home delivery services because it’s more affordable and fewer things can go wrong.

Think about it. You can’t inspect and select your fruits and vegetables. And if there’s something that went wrong with the order, you’ll probably have to bring the goods back to the store, which would be inconvenient for you and would be detrimental to the grocery store’s margins.

Although the margins are razor thin, the management team at Loblaw has been operating in a very efficient manner. They’ve kept food prices low, and customers are relatively happy. I don’t think it makes sense for Amazon to be entering the grocery businesses because it’ll cost it way too much to compete with the likes of juggernauts like Loblaw.

Loblaw recently upped its quarterly dividend by $0.27 per share following its earnings release, which saw quarterly profit up from the same period last year. Loblaw is firing on all cylinders as it aims to further strengthen its wide moat. If you’re a value investor looking to play defence, then look no further than Loblaw.

Stay smart. Stay hungry. Stay Foolish.

Canada's answer to Amazon.com

You've probably never even heard of this up-and-coming e-commerce powerhouse headquartered in Eastern Ontario...

But, despite coming public just last year, it's already helping the likes of Budweiser... Tesla... Subway... and Red Bull move $9.9 BILLION (and counting) worth of goods online each year.

And now it's caught the eye of the legendary investor who got behind Amazon.com in 1997 -- just before it shot up over 23,000% and made investors like you and me rich beyond their wildest dreams.

Click here to discover why this investor says it's time to buy.

Fool contributor Joey Frenette owns shares of Loblaw Companies Limited. David Gardner owns shares of Amazon. The Motley Fool owns shares of Amazon.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to find out how you can claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.