When we asked Brandon Snow, co-chief investment officer at Cambridge Global Asset Management, to name his favourite stock for the next five years, he picked one of Canada’s most venerable firms – George Weston Ltd.
When we asked Brandon Snow, co-chief investment officer at Cambridge Global Asset Management, to name his favourite stock for the next five years, he picked one of Canada's most venerable firms – George Weston Ltd., the food giant founded in 1882. Snow, who has led the Cambridge Canadian Equity Fund to market-beating performance over the past four years, likes Weston's big stake in the Loblaw supermarket chain, as well as the new blood in its executive suite.
THE STOCK George Weston Ltd. (WN-TSX)
THE CASE "We are bullish on Weston because we see a lot of growth ahead for Loblaw, which accounts for 85 per cent of its net asset value. But we think Weston shares offer better value than Loblaw stock.
We began buying shares in Weston after a management change three years ago. When Weston hired its chief financial officer Richard Dufresne from Metro, we felt there was potential for Loblaw to better allocate its capital and deliver more consistent returns to shareholders similar to its well-run rival.
Dufresne crunched the numbers that led to Loblaw spinning off its real estate into Choice Properties REIT, and buying Shoppers Drug Mart. After he took on the added role of CFO at Loblaw and Galen G. Weston was appointed its president last summer, we could see the corporate culture changing to focus on creating shareholder value.
There is a big push to improve Loblaw's operations to deliver growing cash flow. Loblaw is well into integrating Shoppers, and the acquisition is reaping benefits for both brands. The drug-store chain, for instance, is now selling fresh and prepared foods.
A risk to the business is increased competition. Unlike in the past, however, Loblaw now has the systems in place to better forecast its business and react to competition."