Looking forward to 2018, investors will have lots to prepare for as a number of companies in sectors which have experienced higher than normal volatility brace for a rocky 2018. Among the sectors hit hard this year, traditional grocery retail stands out as one sector with perhaps the most polarized of investor opinions heading into 2018.
On the one hand, bullish investors do have a very strong case when considering grocery retailers at current levels. Despite paring back some of the gains in this recent bull market, companies such as Loblaw Companies Ltd. (TSX:L) remain strong long-term growth plays, evidenced by the fact that Loblaw more than doubled over the past five years.
Near-term sentiment shaping the bearish outlook for companies such as Loblaw, however, centers on the fact that over the past six months, shares of Loblaw have dipped more than 10%, with indications this correction may have more room to run.
Despite reporting earnings which impressed many investors, Loblaw recently announced the closure of 22 of its stores as the company moves to improve profitability to keep pace with some of its more profitable peers.
With the rise of e-commerce taking hold, and Loblaw set to embark on its own journey to take advantage of this trend, the ability of big box grocery retailers to continue to turn hefty profits and maintain sky-high debt loads is a question which will likely take time to be answered.
Invest wisely, my friends.
