More Opportunity with Loblaws
Loblaws is a major Canadian grocer and is also a provider of drugstore, general merchandise and financial products and services. The Company is a subsidiary of Weston Limited and has the President’s Choice, no name and Joe Fresh Style brands. In addition, they offer President’s Choice Financial services.
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Nearly a month ago we bought Metro, a major Canadian grocer on weakness. Today, Loblaws was at a low valuation.
We believe that Loblaws recent acquisition of Shoppers DrugMart will help to smooth out and improve the quality of their earnings. At $41 or less, we would take a full position.
Purple Chips 12 -18 month target: $CAD 51.00
LOW VALUATION IN LOBLAWS AT $41.00 (L-T, $CAD 41.31) FULL POSITION
PURPLE CHIPS TARGET: $51.00 POSITION SIZE: FULL (5.0%) P/E: 16.8X DIV: $0.96 (2.3%) MKT CAP: $11.7B Debt: $5.0B RETURN ON CAPITAL: 13.6% EARNINGS YIELD: 7.6% 5 YR EPS Growth rate*:8.5% P/E/G Ratio: 1.95X EPS: $2.47 2014 EST.: $2.81 2015 EST.: $3.33
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
