L & MRU: Two consumer stocks to watch

May 25, 2023 09:49 AM EDT | By Akanksha Vashisht
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  • Stocks that are issued by companies that produce consumer staples are consumer stocks and they act as a cushion for investors.
  • Loblaw, a pharmaceutical and general merchandise retailer, reported revenue of CA$ 12.995 in Q1 2023.
  • Metro operates retail stores that sell groceries and medicines and reported revenue of CA$ 4.554 for the three months ended March 11, 2023.

Consumer stocks are those stocks that are issued by companies that produce consumer staples. These products are consumed daily. Some of the products that constitute consumer staples include beverages, food, paper goods, cosmetics, etc.

Consumer stocks are non-cyclical in nature, which makes them the perfect balancing element against other types of investments. This means that these stocks may even generate stable revenue stream when the economy is in a relatively weaker condition than normal.

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On that note here are two consumer stocks to watch out for:

Loblaw Companies Ltd. (TSX: L)

The company is a pharmaceutical and general merchandise retailer and is one of the largest in the segment within Canada. Additionally, Loblaw operates a financial services business that is engaged in credit card services and investment certificates.

The company reported its Q1 2023 results on May 3, 2023, showcasing revenue of CA$ 12.995. The operating income was CA$ 769 million and the adjusted EBITDA was CA$ 1.448 billion for the three months ended March 25, 2023.

Image source: ©2023 Kalkine®; Data source: Company Reports

Within the retail segment alone, the company recorded an increase of CA$ 690 million or 5.7% during Q1 2023. Loblaw expects its retail business earnings to increase faster than sales for the full year 2023. Its full-year 2023 guidance also highlighted that it would assign a significant portion of its free cash flow to share repurchases.

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Metro Inc. (TSX: MRU)

Metro operates retail stores that sell groceries and medications. Some of the company’s retail segment includes brands such as Metro Plus, Food Basics, while its drugstore business falls under the Coutu and Brunet trademarks.

Image source: ©2023 Kalkine®; Data source: Company Reports

For the three months ended March 11, 2023, Metro reported revenue of CA$ 4.554 and net earnings of CA$ 218.8 million. The adjusted net earnings for the quarter were CA$ 225.4 million, while the earnings per share were reported to be CA$ 0.93.



Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.



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