Top grocers look to build on their gains

Article Excerpt

The shares of grocery store operators Loblaw and Metro are hitting new all-time highs. That’s mainly because their large operations give them economies of scale and the ability to negotiate better prices from suppliers. Both firms are also adding more discount-price stores to further attract cost-conscious shoppers. LOBLAW COMPANIES LTD. $178 is a buy. The company (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 302.6 million; Market cap: $53.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 1.2%; TSINetwork Rating: Above Average; www.loblaw.ca) operates 1,113 supermarkets under several banners, including Loblaws, Zehrs, Provigo, Real Canadian Superstore and No Frills. It also operates 1,354 associate-owned Shoppers Drug Mart locations. In response to higher food costs, many of Loblaw’s customers are switching to its discount-price chains. As a result, the company planned to spend $1.8 billion (net of property disposals) on new stores and other improvements in 2024. As part of that strategy, Loblaw recently opened its 300th No Frills supermarket in Mississauga, Ontario. The company also recently…