Topic: How To Invest

Pat: What do you think of Empire Company shares? Thank you.

Article Excerpt

Empire Company Ltd., $82.05, symbol EMP.A on Toronto (Shares outstanding: 68.0 million; Market cap: $5.6 billion; www.empireco.ca), is a diversified Canadian firm based in Stellarton, Nova Scotia. Empire sells and distributes food through national grocery retailer Sobeys. It also invests in real estate and various publicly traded companies. In June 2007, Empire paid $1.06 billion for the 29.9% of Sobeys that it did not already own. (Sobeys was a recommendation of our Successful Investor newsletter. We first recommended the stock in April 2003 at $36, so the buyout left our subscribers with a 61% gain.) Sobeys owns or franchises about 1,500 stores across Canada. In addition to Sobeys, its banners include IGA, IGA Extra, Price Chopper and FreshCo. The grocery-store operator accounts for over 99% of Empire’s revenue. However, food retailing is a high-volume, low-margin business, so Sobeys generates just 88% of Empire’s earnings. The company’s real estate division includes commercial and residential property operations. It owns 42.8% of Crombie REIT (symbol CRR.UN on…