3 Top TSX Retail Stocks to Buy in December 2022

Three top TSX retail stocks are “strong buys” in December 2022 for their resiliency and impressive financial results in a hyperinflationary environment.

| More on:
A worker drinks out of a mug in an office.

Source: Getty Images

The holiday season is on, and this year is crucial for companies in the retail sector. Because of stubborn inflation and rising interest rates, consumers might curtail spending due to reduced purchasing power. On the investment side, it’s interesting to see some retail stocks display resiliency amid the hyperinflationary environment.

If you have the appetite to invest, Uni-Select (TSX:UNS), Pet Valu Holdings (TSX:PET), and High Liner Foods (TSX:HLF) are excellent picks and the top buys in December 2022.

Successful turnaround

Uni-Select distributes automotive refinish, industrial coatings, and related products in North America. The $1.92 billion company is also a top name in the automotive aftermarket parts business in Canada and the United Kingdom. At $43.81 per share, current investors enjoy a 70.2% year-to-date gain.

The turnaround of Uni-Select is almost complete this year. After three quarters in 2022, net earnings reached US$52.94 million compared to the US$8.11 million net loss a year ago. Notably, free cash flow (FCF) climbed 56.1% year over year to US$112.14 million. In the third quarter (Q3) of 2022, net earnings jumped 88% to US$22.42 million versus Q3 2021.

Brian McManus, Uni-Select’s executive chairman and chief executive officer (CEO), noted the organic growth across all business segments, meaningful cash flow, and higher EBITDA, or earnings before interest, taxes, depreciation, and amortization (+105.4% increase to US$124.4 million), during the quarter. He said, “Our solid financial position and ongoing capital discipline also enable us to capitalize on further acquisition opportunities to strengthen our market position.”

Devoted pet lovers

The support of loyal customers for Pet Valu is so evident this year. In Q3 2022, the $3.01 billion specialty retailer of pet food and pet-related supplies reported decent top- and bottom-line growth. Its revenue and net income increased 21.93% and 10.83% year over year to $244.72 million and $26.98 million, respectively.  

Its president and CEO Richard Maltsbarger said Pet Valu delivered another quarter of exceptional same-store sales growth across the entire network. Because of robust signals from devoted pet lovers across Canada, management forecast same-store sales growth between 15.5% and 16.5% in 2022.

If you invest today, this retail stock trades at $39.75 per share (+10.99% year to date) and pays a modest 0.59% dividend.

Consistent sales growth

High Liner Foods has maintained strong margins and continues to grow its volumes over the last 18 months. The $478 million company processes and markets value-added frozen seafood and carry brands like High Liner and Fisher Boy. In Q3 2022, sales and net income increased 26.6% and 8.7% year over year to $271.2 million and $10 million, respectively.

Rod Hepponstall, High Liner’s president and CEO, said, “In the third quarter, we delivered our sixth consecutive quarter of year-over-year sales and adjusted EBITDA growth.” The best part is that this retail stock is a dividend payer. The board recently approved a 30% dividend hike due improved financial and operating performance. At $14.41 per share (-0.13% year to date), the dividend yield is an attractive 3.77%.

Superb performances

Retail or consumer discretionary stocks tend to be volatile when consumers focus on needs than wants during financial hardships. Uni-Select, Pet Value, and High Liner Foods are exceptions. Expect their superb business and stock performances to continue in 2023.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Pet Valu. The Motley Fool has a disclosure policy.

More on Dividend Stocks

edit Businessman using calculator next to laptop
Dividend Stocks

1 Oversold Dividend Stock (With a 8% Yield) I’m Buying Right Now

Real estate investment trusts Northwest Healthcare offers investors a tasty dividend yield of almost 8%.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

2 Recession-Resistant Stocks to Buy for Steady Gains in 2023

Investors worried about a recession can look to buy utility stocks such as Hydro One and Waste Connections right now.

Read more »

Dial moving from 4G to 5G
Dividend Stocks

Down by 15%: Is BCE Stock a Good Investment in January 2023?

Few companies are truly “too big to fail,” but most market leaders are far more resilient against market headwinds or…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Looking for $200/Month in Alternative Income? Buy 530 Shares of This Stock

Do you want to earn $200 monthly alternative income for the next few years? Then accelerate your investments in this…

Read more »

Dividend Stocks

Deadline Coming: 3 TFSA Stocks to Buy Now Before Dividend Payouts

Invest in RNW stock and 2 other TFSA friendly names before this fast-approaching deadline to get the full 2023 dividend.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Passive Income: How to Earn Nearly $367 Per Month in Your TFSA Portfolio

Top TSX dividend stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Stocks I’d Buy — But I’m Waiting for a Dip

After the recent bounce, It may be smart for investors to wait for a dip before they buy these solid…

Read more »

TFSA and coins
Dividend Stocks

5 Stocks to Buy for $5000/Year in Tax-Free Passive Income

TSX dividend stocks such as Enbridge and TD Bank can help you earn tax-free income via dividends and capital gains…

Read more »