The COVID-19 pandemic has taught us that the demand for groceries is not phasing out anytime soon. Instead, the demand for high-quality grocery supplies has skyrocketed in the past few years, and so have the stock prices of the companies they belong to. So this is the best time to invest in grocery store stocks, and if you live in Canada, here are the top 5 stocks that would give you the best returns in the long term.
What's in the Article:
Top Canadian Grocery Store Stocks with Lofty Returns
| Grocery Store Stocks | Current Price | Price Gain (2021-To Date) | Market Capitalization | Price Range (52-Weeks) |
| Loblaw Companies Limited (L) | CAD 93.97 | 49.61% | $31.77 Billion | CAD 60.86 to 95.49 |
| George Weston Limited (WN) | CAD 136.73 | 43.81% | $20.59 Billion | CAD 91.95 to 140.01
|
| Metro Inc. (MRU) | CAD 64.12 | 12.89% | $15.65 Billion | CAD 52.63 to 66.25
|
| Alimentation Couche-Tard Inc. (ATD.B) | CAD 48.15 | 11.00% | $51.35 Billion | CAD 36.03 to 52.28 |
| Empire Company Limited (EMP.A) | CAD 38.19 | 9.77% | $10.14 Billion | CAD 34.13 to 42.93 |
Note: As you can see from the chart, Loblaw is the clear winner in terms of returns on investment. However, the stock price might be a bit high for average investors. So, you can also choose from budget-friendly stocks such as ATD.B or Empire Company Limited.
1-Loblaw Companies Limited (TSE:L):
Loblaw Companies Limited, a top-ranking candidate in the list of Canadian grocery stocks, has provided its investors with the highest capital gain. From financing services to high-end grocery stores, this company has the best products for its Canadian consumers.
Currently, Loblaw owns 2500+ stores with products offered at both discounted and premium rates. Loblaw has renowned chain stores under its umbrella that include names such as:
- No Frills
- Shoppers Drug Mart
- Real Canadian Superstore
- Presidents Choice
- No Name
In 2021, the company’s market cap peaked from $22.16 Billion to $31.77 Billion, with each share price soaring from $62.81 to $93.97. One of the three largest food stocks with the best value, the fastest growth and the most outstanding dynamism.
Loblaw operates in two operational segments, of which 98% are retail, including food and drug stores, shops and pharmacies, clothing and general merchandise, financial services, credit card services, insurance, brokerage and deposit insurance.
2-George Weston Limited (WN):
With its headquarters in Ontario, Canada, George Weston Limited is the 2nd best grocery store stock you can invest in for 2021. The company engages in the distribution and processing of food in Canada as well as international markets.
To date, the company’s stock prices have skyrocketed from $95.08/share to a whopping $136.73/share. The current market capitalization of the grocery store also jumped from $14.61 Billion to a whopping $20.59 Billion. Given its diversified portfolio, this grocery store stock has managed to soar high even during unstable market conditions. The company also deals in consumer products/services, retail, consumer defensive, TSX composite, TSX 60, and many more.
Although Loblaw and George Weston are listed separately on the Toronto Stock Exchange, Loblaw is a subsidiary of George Weston. Apart from this, other subsidiaries under George Weston include:
- Weston Foods US, Inc.
- Tip Top Bakeries
- Weston Holdings Ltd.
- Weston Bakeries Limited
- Ready Bake Foods Inc.
- Interbake Foods LLC
- Weston Food Distribution Inc.
- Dunedin Holdings S.A.R.L.
- Weston Foods Canada
- Ace Bakery, LLC
3-Metro Inc. (MRU):
Another pocket-friendly grocery store stock to invest in for the year 2021 is Metro Inc. This company operates in Canada as a franchisor, retailer, manufacturer, and distributor in the pharmaceutical and food sectors. In 2021, its stock prices soared successfully by 12.89 percent, helping it bag the 3rd rank in top-performing Canadian stocks in the grocery sector.
The stocks saw a quick jump from $56.8/share to a whopping $64.12/share. Moreover, the company’s market cap also shifted north from $14.21 Billion to $15.65 Billion.
Metro Inc. has several subsidiaries under its banner that include:
- Food Basics
- Super C
- Brunet
- Jean Coutu Group
- Metro Richelieu Inc
- Premiere Moisson
- A&P Drug Mart Limited
- Produits Phoenicia Inc.
- A. Love Foods Inc.
- Epicerie Adonis, Inc.
- Groupe Premiere Moisson Inc.
You might want to try investing in restaurant stocks as well.
4-Alimentation Couche –Tard Inc. (ATD.B):
With 15000 stores in countries such as Canada, Mexico, Norway, the United States, Sweden, and more, Couche Tard is another critical player in the retail industry. The company has its headquarters in Quebec, Canada, with several well-known subsidiaries that include:
- Mac’s Convenience Stores
- Circle K
- Holiday Stationstores
- Topaz Energy
- Statoil Fuel & Retail
- RDK Ventures LLC
Alimentation showed progress right from the start of the year and has managed to move the share price from $43.38 to $48.15. Moreover, its market cap also showed a positive trend as it jumped from $48.32 Billion to $51.35 Billion. So, if you are looking for a budget-friendly stock in the grocery store industry, this is something you can invest in for the long haul.
5-Empire Co. Ltd. (EMP.A):
With its headquarters in Nova Scotia, Canada, Empire Co. Ltd. is a popular conglomerate that engages in corporate and food retail investments. The company has 10000+ convenience stores spread across 10 Canadian provinces, the United States, & other European countries. Among its acquisitions are renowned names such as:
- Sobeys
- Safeway
- Crombie REIT
- Needs Convenience
- Foodland
- Farm Boy
- Lawtons
- Thrifty Foods
- Big 8 Beverages
With so many brands under its umbrella, the company has outperformed several grocery store competitors in the stock market. As a result, in 2021, the company has experienced a surge in its stock price, going from $34.79/share to $38.19/share. The company’s YTD percentage change is about 9.77, with a positive trend line. Moreover, Empire Co.’s MV also saw a quick boost from $9.36 Billion, peaking at $10.14 Billion.
QuickStop convenience stores are located in Northern Canada and Alaska and offer ready meals, petroleum products and related services. These small retail businesses carry a range of everyday items such as groceries, snacks, groceries, confectionery, soft drinks, tobacco, over-the-counter medicines, toiletries, newspapers and magazines.
Goodfood Market Corp. (FOOD.TO)
Goodfood Market Corp. is a pioneering online grocery company in Canada, renowned for its specialization in meal kits and online grocery shopping. The company has carved out a niche in the rapidly evolving grocery sector by focusing on delivering fresh ingredients and easy-to-follow recipes directly to consumers’ doors. This business model caters to the growing demand for convenience, quality, and health-conscious eating options among Canadian consumers. Goodfood’s approach combines the traditional elements of grocery shopping with the modern consumer’s desire for quick, healthy, and hassle-free meal solutions.
The company experienced significant growth during the COVID-19 pandemic as more consumers shifted towards online grocery shopping due to health concerns and lockdown measures. This surge in demand for online grocery services propelled Goodfood to expand its offerings and enhance its delivery capabilities. As a result, Goodfood has not only consolidated its position in the market but also attracted a broader customer base seeking the convenience of home-delivered meal kits and groceries. Reflecting its market presence and investor confidence, Goodfood is publicly traded on the Toronto Stock Exchange under the symbol “FOOD,” offering an investment opportunity in a company at the forefront of Canada’s e-commerce and online grocery shopping trend.
This stock has underperformed and might be a good buy for longer-term growth, or you can try the largest maple syrup producer in Canada.
North West Company Inc. (NWC.TO)
The North West Company Inc. stands out in the grocery sector with its unique focus on serving rural communities and remote regions in Canada, Alaska, the South Pacific, and the Caribbean. This specialization in catering to less accessible areas sets it apart from typical grocery chains, addressing these communities’ specific needs and challenges. The company’s ability to operate effectively in diverse and often logistically complex environments underscores its operational expertise and commitment to these markets.
This niche market focus of The North West Company Inc. presents a distinctive investment opportunity within the grocery sector, appealing to investors interested in a company with a unique geographical footprint and market strategy. The company’s public listing on the Toronto Stock Exchange under the symbol “NWC” allows investors to participate in its unique business model, demonstrating resilience and adaptability in serving underrepresented and challenging markets.
Every stock of food and drink brings something different (pun intended). This article examines three Canadian stocks investors must watch out for in 2023.
Why Invest in Canadian Grocery Store Stocks?
Investing in Canadian grocery store stocks can be an attractive option for several reasons:
- Essential Industry: Grocery stores are part of an essential industry. Regardless of economic conditions, people need to buy food and household items, making grocery stores relatively resilient to economic downturns. As a result, the food and beverage sector on the stock exchange is often seen as a defensive sector.
- Stable Revenue Streams: Grocery stores typically have stable and predictable revenue streams. While they may not offer the high growth potential of some other sectors, they can provide consistent performance, which is particularly appealing in volatile markets or compared to the best consumer cyclical stocks.
- Dividend Payouts: Many grocery store companies, especially the larger and more established ones, offer regular dividend payouts. This can be attractive for income-focused investors looking for a steady income stream.
- Growth in E-commerce and Online Shopping: The increase in online grocery shopping, accelerated by the COVID-19 pandemic, has opened new revenue channels for these companies. Investing in grocery stocks can be a way to tap into the expanding e-commerce sector. You also may have heard, what is TAAS stock? Transportation as a service stocks also deliver groceries locally and are related to grocery stocks.
- Changing Consumer Habits: As consumer preferences shift towards healthier, organic, and locally sourced foods, many Canadian grocery stores are adapting to these trends. This adaptability can lead to new growth opportunities within the sector.
- Defensive Investment: Grocery stocks are often considered defensive investments, meaning they perform better than the overall market during economic downturns. This is because demand for groceries remains relatively stable regardless of the economy.
- Innovation and Expansion: Canadian grocery chains are continuously innovating and expanding their services, such as offering ready-to-eat meals, expanding private label offerings, and enhancing customer experience both in-store and online.
- Diversification: Investing in Canadian grocery stocks can diversify an investment portfolio. The grocery sector often has different market dynamics than other industries like technology or finance.
- Demographic Trends: As the population grows and ages, the demand for groceries and related products is likely to remain steady or even increase, supporting the long-term stability of the grocery sector.
- Sustainability Initiatives: Many grocery chains increasingly focus on sustainability, which has become a significant consumer factor. Companies that are leading in sustainability practices may have a competitive advantage.
However, like any investment, there are risks involved. Factors like changing consumer preferences, competition, supply chain disruptions, and economic fluctuations can affect the grocery sector.
The Canadian Grocery Store Landscape
E-commerce Growth
The landscape of the Canadian grocery store sector has been significantly reshaped by the surge in online shopping, a trend that gained remarkable momentum during the COVID-19 pandemic. Initially driven by safety concerns, many consumers have continued to use online services for their convenience, leading to a sustained shift towards digital grocery shopping. In response, grocery chains heavily invest in their digital platforms, enhance mobile apps, and refine delivery logistics.
This investment often includes forming partnerships with third-party delivery services or developing robust in-house delivery systems. Additionally, there is a noticeable shift towards omnichannel retailing. Retailers strive to integrate their online and offline operations seamlessly, offering customers a variety of shopping experiences. This includes options like click-and-collect, where customers can order online and pick up their groceries in-store, blending convenience with traditional shopping.
Changing Consumer Habits
Concurrently, there’s a noticeable shift in consumer habits influencing Canadian grocery store offerings. The growing consumer demand for organic, natural, and health-focused products is a significant trend. This shift has prompted grocery stores to expand their assortments in these categories, catering to a more health-conscious consumer base. Alongside this, there’s an increasing preference for locally sourced and sustainable products.
This trend responds to consumer demand and aligns with broader environmental sustainability goals, pushing grocery stores to source more products from local suppliers and adopt sustainable practices. Moreover, the fast-paced nature of modern lifestyles drives the demand for convenience foods. This includes a growing market for ready-to-eat meals and meal kits, which grocery stores are capitalizing on by expanding their offerings in this area, catering to the needs of time-constrained consumers.
Conclusion
So, here you go! Start investing in these fantastic grocery store stocks and reap the benefits in the long run. But, before investing, study the market and invest as per your risk appetite. Patience is the key when investing in a stock of your choice. With accurate data and a proper understanding of the key metrics, you can upscale your investment manifold with a better return than banks.