The S&P/TSX Composite Index In the middle of June, they slipped into correction territory. Canadian stocks rebounded broadly in July and august and experienced a spike during the first half of September. The top Canadian index has fallen back to bearish tendencies in recent weeks. Investors have had difficulty finding cover in this volatile environment.
Today I will focus on two TSX stocks which have managed to defy bear markets in 2022. Loblaw Companies (TSX:L). Metro (TSX:MRU). Why is this resilience so strong? Can investors still rely on these equities for their future? Let’s dive in.
Why supermarket retailers survived the turmoil of 2020
In the early days of the COVID-19 pandemic, a lot of attention was paid to grocery retailers. During that time, many non-essential businesses had to shut down for several months. Groceries and other essential businesses, however, remained open. Stocks like Metro and Loblaw were therefore able to withstand a crisis of health for generations.
A historic vaccination drive seemed to have ended the worst of the pandemic in developed nations. However, investors were faced with the next test: soaring inflation. This has also been a strong point in the lives of grocery retailers as well as TSX stocks such Metro and Loblaw. Inflation in 2022 will be driven by food prices.
August saw a slowing of the annual inflation rate to 7%. The low gas station prices have helped soften this high number. Groceries prices increased 10.8% over August 2021. This was the highest rate of growth since 1981. This high price has brought huge profits to grocery stores.
These are the top TSX stocks which have survived the bear market.
Loblaw Companies, Canada’s largest grocery and pharmacy retailer, is Loblaw Companies. As of October 6, 2018, shares of the TSX stock had risen 3.8% in 2022. The stock has increased 17% year-over-year.
Investors should expect to see the company’s next batch of results sometime around November. Loblaw’s revenue grew 2.9% to $12.8 million in the Q2 2022. Meanwhile, it posted adjusted net earnings of $566 million or $1.69 per diluted share — up 22% and 25%, respectively, compared to the prior year.
The TSX stock has a favorable price-to-earnings ratio (P/E) of 18. Loblaw also paid a $0.405 quarterly dividend in the last quarter. This yields a modest 1.5%.
Metro is a Montreal-based retail food and pharmaceutical store. It has a strong presence in Quebec, its native province. The year-to date TSX stock price has increased 1.5%. Its shares are up 9.9% over the previous year.
Metro saw sales growth of 2.5% and 5.86 billion in Q3 2022. Metro saw adjusted net earnings grow by 8.7% to $283million, while adjusted diluted earnings per share rose 11% to $1.18. The current attractive P/E ratio for this TSX stock is 18. This stock offers a quarterly dividend at $0.275 per share. That’s a 1.6% yield.