This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional.
As I mentioned yesterday, this stock has done badly in June. However, I am not going to sell this just over the latest dive. The whole market has been doing badly this summer. I cannot see much happening until the fall.
Since I am not willing to invest in mining or oil on the TSX, to diversify, I have bought into stocks in the Consumer Staples Index. Other than stocks in this index, I have financials, Real Estate, and Utilities. I also have the odd technical stock. This stock is under the Consumer Staples Index. This index has done much worse than the TSX over the last year and also over the last 5 years. At present, this index is back to where it was 5 years ago and this is because of the recent dive in this index.
Now on to what I like about this stock. It is growing its revenue nicely at some 15.6% annually over the last 5 years. The Earnings Per Share (EPS) growth is almost 11% annually over the last 5 years. It is not as good as the revenue growth, but not bad. I very much like the dividend growth of 16% per year over the last 5 years. This stock price grew, to the end of 2007, at the rate of 15% annually over the last 5 years. However, the stock price has come down since then about 30%. We are at present in a bear market and I expect this will improve when the market improves. Note that the Graham price, at the end of 2007 was $30 and this is higher than the current price.
The liquidity re Assets/Liability is fine at 1.8, while the liquidity re current Assets/current liability is low at .99. However, this is not unusual for a merchandising stock. The Accrual ratio at 1.9% is ok. The Return On Equity (ROE) is not bad at 15%, but has been coming down recently. There is good growth in the book value at some 21% annually over the last 5 years.
The problem with this stock is that is growth has slowed. The revenue did not grow for 2007 and it is expected that the EPS will not grow in 2008. However, the dividend has already been increased by 11% for 2008. I think that this stock will be fine for the long term. In the short term, it will probably not do to well. Since I am in for the long term, I intend to keep this stock for now.
See my spreadsheet at http://www.spbrunner.com/stocks/mru.htm. See my website at http://www.spbrunner.com/stocks.html.
Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is www.metro.ca.
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