Two buys with different growth strategies

Article Excerpt

Loblaw aims to spur its growth by selling more non-food items, such as clothing and drugs. Metro hopes to attract more customers by improving its stores and launching new loyalty programs. We see both stocks as buys. LOBLAW COMPANIES LTD. $40 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 276.2 million; Market cap: $10.7 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; SI Rating: Above Average) is Canada’s largest food retailer, with roughly 1,000 stores across the country. Loblaw continues to benefit from its ongoing restructuring plan. The company is fixing its supply networks, improving its distribution centres’ productivity and installing new inventory-information systems. These moves helped increase Loblaw’s earnings by 25.7% in the three months ended March 27, 2010, to $137 million, or $0.49 a share. A year earlier, it earned $109 million, or $0.40 a share. Overall sales rose 3.1%, to $6.9 billion from $6.7 billion. The gain largely came from the 17-store T&T supermarket chain, which Loblaw bought for…