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Highlights
- Three out of the five retail stocks discussed here have paid dividends, with the highest five-year dividend growth rate being 5.31 per cent
- The return on assets (ROA) was 11.85 per cent and return on equity (ROE) was 791.26 per cent for one of these stocks
- The ease of the restriction is expected to improve the sales of these retail companies
The Canadian government announced the relaxation and ease of pandemic-related restrictions, a much-awaited move that lit the mood of Canadians. Market analyses indicate the expected opening of international borders to foreigners and immigrants in September 2021 is also seen as a positive factor to improve retail sales and the consumer goods sector.
But another caveat to note is that as the ill effects of the deadly virus are still rampant, retail sales may dip if another lockdown is announced yet again. This dip and increase in retail sales are expected to continue as restrictions are lifted and reintroduced in Canada and across the globe. Market analyses also hint at retail companies benefitting from online sales and e-commerce whenever physical stores are shut.
On that note, let us explore some Canadian retail stocks that may benefit from this move.
- Metro Inc (TSX: MRU)
Metro is one of the largest retail chains in Canada. It operates as a retailer and distributor of groceries and pharmaceutical products. Metro held a market cap of C$ 15.64 billion on August 20, 2021.
Stocks of Metro closed at C$ 63.99 apiece on August 20, 2021. It reached its 52-week high of C$ 66.25 on November 9, 2020.
The stock price of the retail scrip expanded by nearly 18 per cent in the last six months, whereas it only increased by about 7 per cent over the past year.
The investors of this retail company are set to receive quarterly dividends of C$ 0.25 per share on September 22, 2021. Moreover, the company posted an earnings per share (EPS) of 3.29 and a return on equity (ROE) of 13.39 per cent on August 20, 2021.
Metro Inc posted sales of C$ 5.71 billion in the third quarter of the fiscal year 2021, down from C$ 5.83 billion in Q3 FY20. Its net earnings were C$ 252.4 million in the same quarter. As per the latest press release, Metro introduced 12 plant-based food products in supermarkets across Ontario.
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Also Read: Which Are The 5 Best Retail Stocks?
- Dollarama Inc (TSX: DOL)
The C$ 18.49 million market cap company operates and runs discounted retail stores offering merchandise at lower price points. The investors of Dollarama earned quarterly dividends of C$ 0.05 on August 6, 2021. The dividend yield was 0.331 per cent on August 20, 2021.
Over the past year, the stock price of this retail company increased by 14 per cent. At the market’s close on August 20, the stock’s price was C$ 60.70, and on this day, it traded nearly 34 per cent above its 52-week low of C$ 45.42 (November 2, 2020).
Dollarama Inc posted sales of C$ 954.2 million in Q1 FY22, up 13 per cent Year-Over-Year (YoY). Its EBITDA was C$ 248.2 million in the same quarter. The pandemic impacted retailers based across Ontario.
The valuation metrics highlights that Dollarama posted an EPS of 1.91, ROE of 791.26 per cent and its price to earnings (P/E) ratio stood at 31.8.
- Loblaw Companies Limited (TSX: L)
Loblaw Companies Limited is recognized as one of Canada’s largest pharmaceuticals products, groceries, and other merchandise retailers. The company plans to introduce electric trucks of Freightliner eCascadia to transport grocery and other products from the distribution centers to stores.
The investors of Loblaw are expecting to receive quarterly dividends of C$ 0.365 on October 1, 2021. This retail company posted a ROE of 12.38 per cent, and a return on assets (ROA) of 3.81 per cent, and an EPS of 3.95 on August 20, for their investors. Their five-year dividends grew at a rate of 5.31 on average.
The stock price of this retail chain closed at C$ 88.96 on August 20, 2021. The 52-week high price of C$ 89.63 was also reached on this day. The stock price expanded by nearly 42 per cent on a year-to-date (YTD) basis.
Loblaw Companies posted a revenue of C$ 12.49 billion in Q2 FY21. Its adjusted EBITDA was C$1.37 billion, and its adjusted net earnings available to shareholders were C$ 464 million in the same quarter. As per the CSR 2020 report published in Q2, the company reduced its carbon emission level by 30.9 per cent.
Also Read: 3 Rising Retail Stocks To Buy In May
- Pet Valu Holdings Ltd (TSX: PET)
The C$ 2.38 billion market cap company is a leading Canadian company that supplies pet food and pet products. The company held 69.97 million outstanding shares. Pet Valu held an EPS of 0.91 and a ROA of 11.85 per cent.
Pet Valu launched its initial public offer (IPO) on the Toronto Stock Exchange. The launch of the IPO date was June 24, 2021. This IPO came with a price of C$ 20 per share.
The stock price of the retail scrip closed at 33.40 on August 20 and on this day, it traded roughly 39 per cent above its 52-week low of C$ 24 (June 24, 2021). On a quarter-to-date basis (QTD), the stock’s price increased by close to 25 per cent.
Pet Valu Holdings posted revenue of C$ 182.2 million in Q2 FY21, up from C$ 131.6 million in Q2 FY20. Its gross profit stood at C$ 67.2 million, and adjusted net income was C$ 8.7 million in the same quarter.
The increase in revenue was a result of growth in retail sales and franchise operations. Moreover, same-store sales growth in Q2 FY21 was 28.4 per cent, a 25.per cent increase YOY.
- Aritzia Inc (TSX: ATZ)
This fashion and apparel brand held a market cap of C$ 4.36 billion and outstanding shares of 110 million. The investors of Aritzia enjoyed an EPS of 0.58, ROE of 18.84 per cent, and ROA of 5.57 per cent as of August 20.
At the market’s close, the stocks of this apparel company were priced at C$ 39.28 on August 20. It traded roughly two per cent below its 52-week high of C$ 40.28 (August 11, 2021).
The stock’s price ballooned 127 per cent over the past year. However, it only increased close to six per cent on a QTD basis.
Aritzia Inc posted a net revenue of C$ 246.9 million in Q1 FY22, increasing by 121.7 per cent YOY. Its gross profit margin was 44.2 per cent in the same quarter. The senior leadership of Aritzia commented that sales productivity in Q1 FY22 was close to 99 per cent of the pre-pandemic level in Q1 FY2020.
Bottom line
Although the ease of lockdowns and restrictions In Canada is expected to benefit these companies, the uncertainty and threat of the virus still loom. This may affect the regular business and operations of these companies.
