Saputo (SAP) & Loblaw (L): 2 TSX stocks for you as milk prices rise

Highlights 

• Mounting inflation and strong dairy demand seem to have pushed up milk and dairy prices across Canada.
• This price surge seems to have triggered some interest around milk producers like Saputo (TSX:SAP).
• With grocery stores in some provinces noting a milk price surge of as high as 15 per cent, big grocery chains like Loblaw (TSX:L) are also drawing attention.

Mounting inflation and strong dairy demand seem to have pushed up milk and dairy prices across Canada. This price surge seems to have triggered some interest around milk producers like Saputo (TSX:SAP).

With grocery stores in some provinces noting a milk price surge of as high as 15 per cent, big grocery chains like Loblaw (TSX:L) are also drawing attention.

Let’s see how these two TSX stocks have been doing.

1.    Saputo Inc (TSX:SAP)

Saputo is one of the largest milk and dairy companies in the country. The Montreal-headquartered company processes and markets milk, cheese, creams, and other dairy products globally in the United States, United Kingdom, Canada, and other key markets.

The C$ 11-billion market cap dairy manufacturer and seller recorded C$ 3.68 billion in revenues in the second quarter of fiscal 2022, as compared to C$ 3.7 billion a year ago.

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Rising inflation in North America and other market factors continued to drive up its input costs (including freight and logistics) in the latest quarter, which saw its adjusted EBITDA amount to C$ 283 million.

The dairy giant posted a profit of C$ 98 million in Q2 FY2022, down from C$ 171 million a year ago.

 Image source: © 2022 Kalkine Media®    

Data source: Saputo Inc

Stocks of Saputo closed at C$ 28.39 apiece on Thursday, February 3. This milk stock climbed by over eight per cent from its 52-week low of C$ 26.21 (January 24).

2.    Loblaw Companies Ltd (TSX: L)

Loblaw’s third-quarter revenue reached C$ 16.05 billion in FY2021, which was 2.4 per cent up from the previous year quarter. 

The grocery stores company saw its net earnings stand at C$ 431 million in Q3 FY2021, reflecting a rise of 26 per cent year-over-year (YoY).

The Brampton-headquartered retailer saw its stock grow by almost 64 per cent in the last one year.

Loblaw stock closed at C$ 101.25 apiece on Thursday.

The C$ 33-billion market cap company holds earnings per share (EPS) of 4.27 and a return on equity (ROE) of 13.64 per cent.

Bottomline

The Canadian Dairy Commission said that milk prices have hiked by as much as 30 per cent over the last two years to support milk producers in curbing cost inflation.

Investors should be aware of any price changes of milk and dairy products as it can substantially impact dairy and grocery businesses.

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