Q: Which would you prefer for a 3 to 5 year hold and an explanation please?
5i Research Answer:
We like both, but inflation and cost pressure are likely to impact L more than X. In addition, the grocery sector remains highly competitive, and the recent bread price scandal may hurt sentiment in the short term. Meanwhile, X remains largely as a monopoly in Canada, requiring little capital and benefiting from strong markets and investor growth overall. It has some cyclicality, and in a weak market may decline 'more' than L, but overall we think it has much more growth potential longer term.