Consumer stocks with good brands and market leadership are in a strong position to increase earnings as the COVID-19 pandemic eases.
In the meantime, the consumer shift to eating at home contributed to this retail giant’s 11.6% revenue growth in the most-recent quarter.
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Canadian Growth Stocks: CGI Group, CAE Inc., Fortis Inc. Stock and more.
METRO INC. (Toronto symbol MRU; www.metro.ca) operates 950 grocery stores and 650 drugstores, in Quebec, Ontario and New Brunswick.
The stock is up 14% since the start of 2020, as the company continues to benefit from the consumer shift to eating at home during the COVID-19 pandemic instead of going to restaurants.
For the fiscal 2020 third quarter, ended July 4, 2020, sales improved 11.6%, to $5.86 billion from $5.23 billion a year earlier. That beat the consensus forecast of $5.82 billion. Same-store sales soared 15.6% at the supermarkets but gained just 1.0% at the drugstores.
Metro spend $107 million in the latest quarter on higher wages for its employees and plexiglass barriers. Despite those added costs, earnings in the quarter still jumped 18.2%, to $272.3 million from $230.3 million a year earlier. That excludes unusual items. Per-share earnings gained 20.0%, to $1.08 from $0.90, on more shares outstanding.
Growth Stocks: A reasonable valuation and dividend growth too
Metro’s sales growth will slow as consumers return to their normal shopping patterns. However, the stock trades at a reasonable 19.0 times the $3.24 a share that the company will likely earn for all fiscal 2020.
With the March 2020 payment, Metro raised your quarterly dividend by 12.5%. The new annual rate of $0.90 a share yields 1.5%.
Your Metro dividend has grown an average of 14.0% annually over the last 5 years. The company’s TSI Dividend Sustainability Rating is Highest.
Hi, Brad. We continue to see Metro and Loblaw as suitable for new buying. Both benefit from the current COVID lockdowns but are also making investments that will pay off for many years to come.
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Canadian Growth Stocks:
CGI Group, CAE Inc., Fortis Inc. Stock and more.
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How do you compare Metro and Loblaws – which is preferred?
Hi, Brad. We continue to see Metro and Loblaw as suitable for new buying. Both benefit from the current COVID lockdowns but are also making investments that will pay off for many years to come.