Metro Stock or Loblaw Stock: Which Is the Better Buy?

Take a closer look at these two Canadian consumer staple stocks to determine which might be better for your portfolio right now.

| More on:
Supermarket aisle with empty green shopping cart

Image source: Getty Images

As of this writing, the S&P/TSX Composite Index is up 6.08% from its February 13 level. Before the upward trend, the Canadian benchmark index was quite volatile for over a year amid macroeconomic jitters.

The recent upward trajectory allowed many investors to realize significant capital gains on investments. Many of them missed the opportunity to buy on the dip. Then again, some stock market investors continue looking for stocks lagging behind the broader market to leverage the bull market.

However, not every investor is interested in playing with the ups and downs of a volatile market to their advantage. If you seek stable and recession-resistant stocks for your portfolio, it might be a good idea to look for opportunities in resilient sectors of the economy.

While utility stocks are excellent for this purpose, the relatively flat share price movement does not offer much in capital appreciation.

If you want to invest in recession-resistant businesses that also offer upside through capital gains, consider investing in Canadian food stocks. To this end, I will discuss two Canadian stocks you can consider for your portfolio.


Metro (TSX:MRU) is a $16.69 billion market capitalization food retailer headquartered in Montreal. The discount food and drug retail stock has a solid business that saw its quarterly revenue grow by 6.5% in its quarter that ended in 2023. In the same period, Metro stock saw same-store sales grow by 3.9% and 6.1% at pharmacies and food service outlets, respectively.

These factors from its quarterly performance suggested that the company is coming out of the inflationary rut with little more than a few scrapes. Additionally, Metro stock raised its dividend by 10.7% year over year.

The management is also committed to reducing outstanding shares, with plans to repurchase up to seven million common shares by November 24, 2024. It means the remaining shareholders will get more equity claims in the stock.

The launch of its automated fresh produce plant and automated distribution centre will lead to significant long-term profitability. As of this writing, Metro stock trades for $73.51 per share, boasting a 1.82% dividend yield.

Loblaw Companies

Loblaw Companies (TSX:L) is a Canadian retailer with a $46.45 billion market capitalization headquartered in Brampton. While Metro stock’s latest quarterly earnings report showed it recovered from the inflationary market, Loblaw stock has already recovered from almost 10 years of underperforming since 2021 to beat the gains that the former garnered in that time.

Loblaw Companies has been on a strong run for a couple of years, despite macroeconomic jitters. It opened more than 30 NoFrills and Maxi stores last year, expanding its retail footprint. It has good momentum in its bid to solidify its position as the largest drug and food retailer in Canada.

Its recent quarter saw a 2.3% and 3.7% year-over-year growth in its earnings and revenue, respectively. Its adjusted earnings per share also grew by 13.6% in the same period, showing that it is quite profitable.

With new pharmacy-based clinics lined up to drive more growth, Loblaw is also aggressively repurchasing its common shares. As of this writing, it trades for $149.84 per share, boasting a 1.19% dividend yield.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Metro made the list!

Foolish takeaway

Metro stock has been repurchasing its stock aggressively in light of positive momentum for the business. However, it anticipates flat to lower earnings for fiscal 2024 due to its new launches.

While the offerings will likely drive long-term profitability for the stock, Loblaw stock anticipates faster earnings growth this year and has more bullish guidance for fiscal 2024. It might be a more attractive investment to consider between the two consumer staple stocks.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

A worker uses a double monitor computer screen in an office.
Dividend Stocks

TFSA Investors: 2 Winning Buy-and-Hold Forever Stocks in April 2024

Buy-and-hold stocks are easy enough to find if you limit yourself to dividends, but there are at least a few…

Read more »

worry concern
Dividend Stocks

Telus Stock Is Down to its Pandemic Low of Below $22: How Low Can it Go?

Telus stock is down 37% in two years and is trading near its pandemic low, making investors wonder how low…

Read more »

money cash dividends
Dividend Stocks

Portfolio Payday: 3 TSX Dividend Stocks That Pay Monthly

After adding these three TSX dividend stocks to your portfolio, you can expect to receive attractive monthly income for years…

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

REITs with modest amounts of debt, like Killam Apartment REIT (TSX:KMP.UN), can be good investments.

Read more »

Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Some of the smartest buys investors can make with $500 today are stocks that have upside potential and pay you…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Dividend Stocks to Buy in April for Safe Passive Income

These TSX Dividend stocks offer more than 5% yield and are reliable bets to generate worry-free passive income.

Read more »

protect, safe, trust
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $1,000

If you've only got $1,000 on hand, that's fine! Here is how to make a top-notch, passive-income portfolio that could…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

CPP Insights: The Average Benefit at Age 60 in 2024

The average CPP benefit at age 60 in average is low, but claiming early has many advantages with the right…

Read more »