Investors looking for rebound plays certainly have a wide range of options to choose from. Given recent turbulence in a number of key industries, choosing which companies will be able to benefit from long-term growth trends can be the more difficult task in today’s market filled with pricey stocks based on valuation multiples which are at, or above, historical levels in most sectors.
One company which has been on quite the tear of late is Empire Company Limited (TSX:EMP.A). Empire is the parent company of Sobey’s, and has seen its stock rebound nicely since news of Amazon.com, Inc.’s (NASDAQ:AMZN) entrance into the grocery retail industry hit all North American retailers hard.
The company has also been persecuted for its integration of its acquisition of Safeway Canada in 2013, with many investors believing the integration was taken on poorly. The acquisition was certainly a pricey one, and with a relatively high debt load, the concern taken by many in the financial sector is that Empire’s ability to return value to shareholders may be diminished over time by said acquisition.
That said, it appears that Empire has been able to execute operationally in an improved fashion, supporting the valuation bump investors have experienced of late. The company’s “Project Sunrise” which aims to save approximately $500 million per year for the next two years is one which has been met with new investor enthusiasm, and should Empire continue to execute efficiently, investors may be well-served by holding onto existing positions or adding a small position accordingly.
Invest wisely, my friends.
