Almost all sectors in the Canadian market have some degree of variety. There might be stocks in a sector that might react differently to negative and positive catalysts like market crashes, weak economies, or record sales numbers. Retail stocks are no exception.
The most significant difference, especially in weak markets, is between retail stocks tied to businesses with necessary offerings and companies that offer consumer discretionary goods.
With that in mind, there are three retail stocks that should be on most Canadian investors’ radars for this month.
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A grocery and pharmacy retail company
Metro (TSX:MRU) is a Montreal-based retail giant with two sizable pharmacy and grocery retail chains, mainly in Quebec and Ontario.
The overall retail portfolio consists of 980 food stores and 640 pharmacies across the two provinces. The Metro brands are household names in these provinces, and they have developed a healthy consumer base.
One reason to buy this retail stock is the business model itself. The two things it sells — i.e., food and medicine (at its store) — are things that people have to purchase, regardless of how the economy is doing. This makes the stock resilient even during periods of weak economies when people are more focused on saving than buying.
The other reason is its compelling performance history. At a 48% growth in the last five years, the stock is well on its way to double its investors’ money in a decade. It also offers dividends at a 1.6% yield.
A dollar store retail company
Dollarama (TSX:DOL) is the largest Canadian dollar store chain in Canada and a growing giant in Peru. The company already has 1,500 stores in the country and is expected to grow this number to 2,000 by 2031. Similarly, there are about 440 stores under the Dollarama banner in Peru, and the 2029 target is 850 stores there.
The stock growth is just as powerful and compelling. It has risen by 220% in the last five years alone. That’s an annualized growth of around 44%. At this rate, it can grow your capital by a factor of four in less than a decade.
It’s a bit overvalued, but considering its growth pace, the numbers are pretty reasonable. It pays dividends, too, but the yield is too low at 0.25%.
A grocery retail company
While you can own a piece of the grocery business by buying Metro stock, you can tap into the largest grocery chain in Canada by investing in Loblaw (TSX:L). While the exact percentages vary according to different experts, there is no denying that Loblaw owns the most significant slice of the Canadian food retail market, roughly a third of it.
This is reason enough to consider buying this retail stock — leadership in an evergreen market since groceries/food remain relevant regardless of the market and economic conditions.
Another reason is its performance which has picked up pace since last year. In the last 12 months, Loblaw has risen by about 46%, which is substantial growth of a blue-chip stock of this magnitude.
Foolish takeaway
All three retail stocks are currently bullish. However, the chances of these momentums waning or turning might be better compared to the market as a whole. They also represent solid businesses rooted in the community and have resilient business models.
This, combined with their performance in the last decade, makes all three decent long-term picks you should consider in November.
