Loblaw Companies Limited (TSX: L), Metro Inc. (TSX: MRU), and Empire Company Limited (TSX: EMP.A) are three of the largest owners and operators of grocery stores and pharmacies in Canada, and all of their stocks represent attractive long-term investment opportunities today. Let’s take a closer look at each, so you can determine which would be the best fit for your portfolio.
1. Loblaw Companies Limited
Loblaw is the company behind retail banners such as Loblaws, Zehrs Markets, Extra Foods, Valu-Mart, Atlantic Superstore, and Shoppers Drug Mart, and its stock has risen over 9.5% year-to-date.
At today’s levels, its stock trades at 19.4 times fiscal 2015’s estimated earnings per share of $3.52 and 16.6 times fiscal 2016’s estimated earnings per share of $4.10, both of which are inexpensive compared with the industry average price-to-earnings multiple of 28.3 and the latter of which is inexpensive compared with its five-year average multiple of 16.8.
In addition, Loblaw pays a quarterly dividend of $0.25 per share, or $1.00 per share annually, giving its stock a 1.5% yield at current levels. It is also important to note that the company has increased its dividend for four consecutive years.
2. Metro Inc.
Metro is the company behind retail banners such as Metro, Super C, Food Basics, Brunet, and Clini Plus, and its stock has risen over 15.5% year-to-date.
At current levels, its stock trades at 17.8 times fiscal 2015’s estimated earnings per share of $2.02 and 16.2 times fiscal 2016’s estimated earnings per share of $2.23, both of which are inexpensive compared with the industry average price-to-earnings multiple of 28.3, but are expensive compared with its five-year average multiple of 12.4.
Additionally, Metro pays a quarterly dividend of $0.1167 per share, or $0.4667 per share annually, which gives its stock a 1.3% yield at today’s levels. Investors should also note that the company has increased its dividend for 21 consecutive years.
3. Empire Company Limited
Empire is the company behind the Sobeys retail banner, and its stock has fallen over 6.5% year-to-date.
At today’s levels, its stock trades at 14.9 times fiscal 2016’s estimated earnings per share of $5.47 and 13.1 times fiscal 2017’s estimated earnings per share of $6.25, both of which are inexpensive compared with the industry average price-to-earnings multiple of 28.3 and its five-year average multiple of 15.
In addition, Empire pays a quarterly dividend of $0.30 per share, or $1.20 per share annually, giving its stock a 1.5% yield at current levels. The company has also increased its dividend for 20 consecutive years.
Which food retailer would fit best in your portfolio?
Loblaw, Metro, and Empire represent three of the best long-term investment opportunities in the retail industry today. Foolish investors should take a closer look and strongly consider making one of them a core holding.
