5 TSX retail stocks to explore after latest GDP report

This year has been daunting for the stock market and for investors. It has been a roller coaster ride with rising interest rates, inflation, and a slew of macroeconomic factors creating an impact on the economy.

So, for investors looking for stability, there is a ray of hope as the Canadian economy grew by 0.1 per cent in August 2022. The retail sector also rose by 1.2 per cent in August, a noteworthy rebound from July 2022.

The retail sector may sail through irrespective of prevailing economic conditions due to the essential nature of its services.

To stay strong, an investor must be aware of the current market and company trends along with their portfolio needs. Some market trends and factors may make the investor nervous. But it is crucial to analyze the factors and assess the current overall conditions before investing.

Amid all these, let’s explore five retail stocks along with their recent financial highlights:

1. Alimentation Couche-Tard Inc. (TSX: ATD)

Alimentation Couche-Tard Inc. operates convenience stores across Russia, Poland, North America, and Ireland. The primary source of income for the company is through car wash services, quick service restaurants, grocery and tobacco products sales, beverages and fresh food, and other retail products.

For Q1 of fiscal 2023, the net earnings of Alimentation were reported at US$ 872.4 million compared to US$ 764.4 million in Q1 of fiscal 2022. The total merchandise and service revenues grew by 0.1 per cent to US$ 4.1 billion for the same comparative period.

Further, EBITDA was noted at US$ 1.5 billion and witnessed an increase of 10.6 per cent. The quarterly dividend to the shareholders was posted at C$ 0.11 and three-year dividend growth was noted at 16.02 per cent.

On October 28, 2022, the stock price of Alimentation Couche-Tard Inc. was C$ 61.45.

2. Dollarama Inc. (TSX: DOL)

Dollarama Inc. is a retailer of discounted stores based in Canada. The company deals in seasonal items, consumer products and general merchandise at low fixed price points. Out of the three segments, consumer and general products contribute to most of the product offering by the company.

For Q2 of fiscal 2023, Dollarama's operating income grew to C$ 287.4 million, a growth of 30.3 per cent from the year-ago quarter. The company’s sales also grew by 18.2 per cent and was reported at C$ 1,217.1 million for the same comparative period.

The EBITDA too increased to C$ 369.4 million compared to C$ 293.7 million in the same quarter a year ago. The Q2 2023 net earnings of Dollarama were reported at C$ 193.5 million compared to C$ 146.2 million in Q2 2022.

Dollarama Inc. pays a dividend of C$ 0.055 on a quarterly basis. It has a dividend yield of 0.269 per cent.

3. Loblaw Companies Limited (TSX: L)

Loblaw Companies Limited is a retailer engaged in pharmacy, general merchandise, and grocery. The company operates under its key grocery banners that include Maxi, Loblaw and No Frills.

For Q2 2022, the operating income of Loblaw Companies Limited fell by 1.3 per cent (C$ 10 million) and was noted at C$ 742 million compared to the same quarter the previous year.

On the other hand, the adjusted EBITDA was noted at C$ 1,499 million which witnessed an increase of C$ 128 million (9.3 per cent).

The revenue also grew to C$ 12,847 million, an increase of 2.9 per cent (C$ 356 million). The earnings per share (EPS) was noted at C$ 5.97 and the P/E (price to earnings) stood at 19.10. The quarterly dividend paid by Loblaw was C$ 0.405 per share.

On October 28, 2022, the stock price of Loblaw Companies Limited was C$ 113.91.

4. Pet Valu Holdings Ltd. (TSX: PET)

Pet Valu Holdings Ltd. operates stores with a total market capitalization of C$ 2622.17. The company deals in providing pet-related products. The product range of the company includes frozen raw food, wet and dry food, Jerky and training treats. Moreover, the company offers services in the areas of grooming, adoption, and dog wash.

In Q2 2022, Pet Valu Holdings reported an operating income of C$ 39.3 million that grew by 48 per cent compared to the same quarter of the previous year.

The net income of the company was noted at C$ 25.3 million which fell from C$ 44.3 million in the same comparative period the previous year.

The adjusted EBITDA increased by 23 per cent and was noted at C$ 52.1 million. The revenue also rose to C$ 227.7 million, an increase by 25 per cent from the year-ago quarter.

On February 25, 2022, Pet Valu Holdings announced its entry into the Québec market by its acquisition of Les Franchises Chico Inc.

5. Metro Inc. (TSX: MRU)

Metro Inc. is a Canada-based grocery retailer and operates drugstore footprint.  Moreover, it operates individual stores as well. Additionally, the company is a distributer, and leverages its supply chain capabilities for servicing smaller neighborhood grocery stores.

For Q3 2022, Metro Inc reported net earnings of C$ 275 million with an increase of nine per cent as on a year-ago quarter. The sales also witnessed an increase of 2.5 per cent and was reported at C$ 5,865.5 million. The same-store food sales and same-store pharmacy sales rose by 1.1 per cent and 7.2 per cent respectively.

The graph below illustrates the dividend growth of Metro Inc. for two different time periods:

Bottom Line

There are several companies that can easily make through difficult times. Finding such companies is an art and they can help to reposition your portfolio in no time. Along with this, there is always a degree of capital risk involved in selecting such companies. Hence, the risk should be well calculated and considered before picking up your stocks.

Having a well-balanced portfolio is always essential. Diversification and long-term approach may work as a support system to your wealth dreams. Implement these two factors to minimize the risk involved and pave the way for a stabilized portfolio.

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.