2 Stocks to Watch This Week

Look out for the results of Metro and Sirius.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The Toronto Stock Exchange 300 Composite Index (^GSPTSE) lost 0.9% over the past week with the wood products and forestry companies amongst the biggest losers. Some of the other big winners over the past year, such as Constellation Software, Valeant Pharmaceuticals, and Canadian Pacific Railways were also noticeable among the largest decliners.

Oil and gas exploration companies had a good week fueled by higher natural gas prices with the top seven slots occupied by companies from this sector. Real Estate Investment Trusts, led by RioCan REIT, also made a comeback on the back of lower government bond yields after their major declines last year. TMX Group, operator of the Toronto Stock Exchange, had a good week, gaining 3.2% on improving business conditions.

The corporate reporting diary is light for the coming week but two major macro events on the local calendar will probably dominate the headlines. The main focus will be on the outcome of the Bank of Canada meeting on Wednesday, where no action on the interest rate front is expected but the comments from the governor on economy and inflation will be followed with interest. The second event is the publication of the March inflation numbers where a continuation of a tame rate of inflation, as measured by the Consumer Price Index, is expected.

Watch the performance of these companies this week

Metro Inc (TSX: MRU), the struggling food and pharmaceutical retailer is expected to report results for the second quarter of the 2014 financial year on Wednesday. The market consensus expectation is a profit of $1.03 per share for the quarter compared to $1.02 a year ago. Poor weather conditions hampered sales in December and the early part of January leading to results below expectations for a number of the other Canadian retailers. Metro should be no exception.

The same stores sales have started to stabilise in the previous quarter but at the expense of profit margins – it will be interesting to see whether the company continues with the strategy of lower prices to boost sales. While gross profits will again be under pressure in the second quarter, the ongoing share buyback program will support the earnings per share.

SiriusXM (TSX: XSR) is a Canadian-wide provider of satellite-based subscription audio services. It is the Canadian partner of U.S.-based SiriusXM Radio (NASDAQ: SIRI) and carries most of the same audio streams.

The company is expected to report results for the second quarter of the 2014 financial year on Monday. A 66% growth in the profit per share from $0.03 to $0.05 is expected. Car sales, which performed well in 2013, is a key determinant of new subscribers for the business. Premium content and increasing penetration rates are further factors that should sustain the rapid growth of the business.

The share price of the company increased by more than 4,000% from the bottom in March 2009 to the current price of $8.32. The valuation at the current price is steep but will unwind over the next few years if the company can maintain its high growth rate.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Deon Vernooy does not hold a position in any company mentioned above. The Motley Fool owns shares of Sirius XM Radio.

More on Investing

Hands holding trophy cup on sky background
Investing

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Here are three top TSX growth stocks that may be worth a look, given the significant valuation declines these stocks…

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Man data analyze
Stocks for Beginners

Beginners: 2 Market-Beating Stocks Just Getting Started

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) and Constellation Software (TSX:CSU) are proven market beaters that could continue their ways.

Read more »

oil and natural gas
Energy Stocks

Small OPEC+ Oil-Output Hike: Buy More Energy Stocks?

Energy stocks could soar higher, because oil markets will remain tight due to the small production increase by OPEC+.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

edit Person using calculator next to charts and graphs
Investing

Where to Invest $500 in the TSX Right Now

Long-term investors can look to buy stocks, including Suncor Energy and Shopify, as they are poised to outpace the broader…

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

falling red arrow and lifting
Investing

2 Oversold TSX Stocks That Should Bounce Back

Stocks that are oversold without an external catalyst like a market crash or a weak sector might be risky buys,…

Read more »