Money These food retailers look cheap: Which is the better buy?

22:57  16 april  2018
22:57  16 april  2018 Source:   fool.com

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In my view, this is negligible; because its yield is quite small, investors should focus on potential price appreciation instead. Which is the better buy ? Loblaw trades at a multiple of ~13.9, while the Reuters analyst consensus thinks the food retailer will grow its earnings per share by ~8.2% per year

These Food Retailers Look Cheap : Which Is the Better Buy ? Traditional retailers like Hudson’s Bay Co. (TSX:HBC) are facing a challenging 2018 as the old guard in retail is reporting more casualties.

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN.ca or Microsoft.

  These food retailers look cheap: Which is the better buy? © Provided by Fool

Food retail stocks have really come off in the last year. The stock of Alimentation Couche-Tard Inc. (TSX:ATD.B) has declined nearly 20% from its highs. Loblaw Companies Ltd.(TSX:L) stock is ~19% lower than its 52-week high. Which is the better buy?

A business overview

Couche-Tard is a convenience store leader with +10,000 stores in North America, of which ~86% have road transportation fuel dispensing. Couche-Tard also has a European network of +2,700 stores, the majority of which offer road transportation fuel and convenience products.

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Best Cheap Cat Foods . Published on August 17, 2017 By Elizabeth Sheer. Buying Guide. Cheap cat food is readily available at local brick-and-mortar stores, including big-box retailers and specialty pet supply houses The vegetable content looks good to humans but might not do much for cats.

For the Best Fast Food Bargain, Don’t Look to the Drive-Thru. Retailers understand this mentality better than consumers do—studies have shown that shoppers are more inclined to buy something after being given a freebie.

Furthermore, Couche-Tard has +1,900 stores under licensing agreements in 14 other countries and territories: China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, Saudi Arabia, the United Arab Emirates, and Vietnam.

Loblaw is Canada’s largest retailer with nearly 2,500 corporate, franchised and associate-owned locations. It has full-service pharmacies in +1,300 Shoppers Drug Marts.

The minimum wage hikes in Canada will have less impact on Couche-Tard because of its global diversification.

a pile of fruit© Provided by Fool

Dividends

Couche-Tard has hiked its dividend per share for eight consecutive years with a five-year dividend-growth rate of ~29%.

Notably, the stock has maintained the same dividend for the last six quarters. The company needs to increase its dividend in the next two quarters to maintain its dividend-growth streak. Couche-Tard’s payout ratio is estimated to be ~11% this year. At ~$53.80 per share, it offers a yield of ~0.70%.

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CHEAPEST SUPERMARKET UK: Does Lidl, Aldi or Morrisons make it to the top spot, or will Asda or Tesco get a look in? This is the best value chain to buy your groceries, according to “Consumers are becoming increasingly price savvy, which means retailers are constantly having to up their game.

Mobile apps which help you buy cheap surplus food from restaurant's buffets. Supermarket offers on cheap food nearing its expiry date. And large marketing campaigns by the retailers and If we take a look at the food service and catering industry, a lot of "wonky" produce can be put into good use.

I suspect management is focused on deleveraging after its huge acquisition of CST Brands in mid-2017. The global convenience store leader remains a strong free cash flow generator. So, I don’t see any reason the company will halt its dividend-growth streak.

Moreover, in the last decade, Couche-Tard has had a few years of slow dividend growth (4% and 7%). Investors should be prepared for slow dividend growth occasionally, but the growth story is still intact.

Loblaw has increased its dividend per share for six consecutive years with a five-year dividend-growth rate of ~4.7%. Its payout ratio is estimated to be ~23% this year. At ~$63.40 per share, Loblaw offers a yield of ~1.7%.

Investors should note that a tiny portion (

Which is the better buy?

Couche-Tard trades at a multiple of ~16.3, while the analyst consensus from Thomson Reuters thinks the company will grow its earnings per share by ~17.8% per year for the next three to five years.

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Best Buy Co. (BBY) , Williams Sonoma Inc. (WSM) , Staples Inc. (SPLS) and a slew of other retailers quite unlikely to be stocking organic kale or gluten-free baked goods anytime soon Demographically, buying a discount retail chain would be an interesting complement to the Whole Foods deal.

June: Best time to buy a laptop, vacation tickets. Hemera/Thinkstock. • Lingerie: Apparel retailers such as Victoria’s Secret and BareNecessities.com turn over inventory this month, and hold storewide sales. Find out how to make even cheap pairs of jeans look expensive.

Loblaw trades at a multiple of ~13.9, while the Reuters analyst consensus thinks the food retailer will grow its earnings per share by ~8.2% per year for the next three to five years.

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Whether you need cheap and cheerful or reassuringly expensive, you can always find the carrier bag to get These include: Produce bags - Used by food retailers from mega-size supermarkets Contains tonnes of information and details of where to buy polythene food bags - the best way to keep your

Now with big food retailers looking to repeat their successes as they expand into Africa, the There is little doubt that the entry of big food retailers risks dousing these sparks of And if at the same time, big retailers used their control over consumer choice to push their customers to buy cheap

Couche-Tard is trading at a more attractive valuation and can deliver much stronger total returns than Loblaw. We’re talking about the potential of outperforming by +8% per year!

5 stocks we like better than Couche-Tard

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Iain and his team just revealed what they believe are the five best stocks for investors to buy right now… and Couche Tard wasn’t one of them! That’s right – they think these five stocks are even better buys.

See the 5 stocks

*returns as of 5/30/17

Fool contributor Kay Ng owns shares of Couche-Tard. Couche-Tard is a recommendation of Stock Advisor Canada.

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