I like Loblaw

Back when I first read Stop Working and wanted to get started in investing, my number one pick was Loblaw. I remember watching it when it was around $52 and thinking it was such a deal and wishing I had the money to buy it right then and there. It’s now at $45, and doesn’t seem to be very popular although since I thought it was a deal at $52, then it’s got to be an even better deal now at $45, right? Problem is, I don’t know anything about determining a stock’s value, so I don’t even know what a deal is.

But I do know that I think Loblaws is doing good stuff. From what I understand, the company has been undergoing some major restructuring and that’s why their profits and share price have been suffering. There is also talk of the threat of Wal-Mart opening up superstores here and such. But seriously, I see enough differentiation between the two and I like what I see at RCSS better. Here out west we have The Real Canadian Superstores, and I think it’s a great store. I really like what they are doing with the President’s Choice brand. The message I get as a consumer is that they want to provide thoughtful, quality products, at a competitive price. When I shop at Wal-Mart, the message I get is that they want to provide stuff at the lowest price possible. Well I don’t want stuff, I want good quality products. In the last couple of months I’ve been really impressed with the President’s Choice products. Their housewares are stylish and well designed. The food products are interesting with a gourmet twist, and they have a great selection of organic products as well. Even the Joe Fresh clothing line is well designed but inexpensive. Basically I think they are doing a great job at building the brand and surely that’s got to be a good thing that will allow them to grow their profits and grow their dividends?

I really don’t know though. I’m pretty sure analyzing stocks solely from a consumer perspective isn’t the way to do it. But I don’t know enough about investing to know how else to look at the stock. Anyone have any thoughts on Loblaws?


4 Responses to “I like Loblaw”

  1. 1 mariam November 14, 2007 at 8:05 pm

    Hi CS,

    I have to admit that I thought exactly like you did. I looked at Loblaws at around $56 so am I glad I didn’t pull the trigger!

    I haven’t looked at it since then.

    Did you ever get a brokerage account with TDW? They have this Market Research section and you can read the financials on any US or Canadian company. I’d start there.

    The reason why I didn’t buy was because I didn’t like their P/E as it was high compared to Metro and Sobeys. And frankly, their distribution problems wasn’t a myth. Their selection of stuff was terrible. How can you have no strawberries in strawberry season?! Also, I think Galen Weston was on BNN or some other news channel to say that they were going to raise their food prices as wheat and dairy had gone up. Great. Bad selection, jacking up the prices and high P/E. 3 strikes and that’s why I didn’t buy.

    Things might have improved since then and when everyone hates something, it’s the best time to buy!

  2. 2 centsprout November 14, 2007 at 9:06 pm

    I didn’t get the TDW account, just the mutual fund account set up. But now I’m thinking I should get the TDW as well, so I could have just done that in the first place. Oh well, live and learn.

    Interesting thoughts on L! Thanks for sharing. Good point on the high P/E. Also it’s funny with a chain like this that has different banners in different parts of the country that people get such varied experiences at the different banners. I keep reading about how Loblaws stores are seeming run down and stuff but here out west we don’t have Loblaws, only RCSS and they look just fine! Makes it hard to compare and try and figure out what exactly is going on. But I did read someone speculate that they are thinking of focusing more on the RCSS idea and opening more of those out east. I guess we’ll see.

    Today I just discovered my local RCSS has a whole natural food aisle with all the stuff I’ve been trekking out to Natural Foods stores to buy. The place just keeps getting better and better!

  3. 3 Esme November 14, 2007 at 11:37 pm

    oooo, when I was watching Market Call quite a few analysts recommended Loblaw. It’s at $40 something today and quarterly dividend of $0.21 🙂

  4. 4 White Eagle November 15, 2007 at 6:35 pm

    I love shopping at Loblaws and RCSS but when it comes to investing in Loblaw, I’m holding onto my cash for now. They’ve been talking about this supply distribution issue for years and I guess the investments they’ve made in this area still aren’t paying off. If the downtrend continues, perhaps Walmart will buy them out. There are too many other good dividend-paying stocks out there for me to consider Loblaw at this point in time.

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