Daily Stock Report

Loblaw Companies Ltd (L.TO) - July 28, 2022

Canada’s largest grocery chain saw an increase in its second
quarter profit and revenue, thanks to strong drugstore sales. Net income was up
3.2% or $375M as customers seem to be shifting towards its discount brands like
No Frills and Maxi as price sensitivity seems to be growing. Loblaw Companies
(L.TO) says it is seeing signs that inflation “has or will soon peak” but that
supplier costs are still high.

In the defensive sector of Consumer Staples, Loblaw Companies
(L.TO) has moved up in the Favored Zone of the SIA S&P/TSX 60 Index Report
to the #2 position. This is up $5 over this time to close yesterday at $117.09,
which is better percentage than the TSX Composite Index has been over the same
time.

An upward trend is still in effect for this stock, but in reaction
to the latest earnings release, the stock has moved down a bit in its current
channel. Potential resistance ahead based on its prior moves are around $123
and support can be found around the $108 level. Same-store sales for L.TO were
up 0.9% in its grocery chains compared to last year and its drug retail
business saw a jump of 5.6% compared to last year which isn’t seeing the same
impact of inflation that the grocery chains are. 

Loblaw Companies (L.TO) is currently in a bullish Triple Top chart
pattern on a 2% Point and Figure chart. Since its move into the Favored zone in
March, it has consolidated into a sideways pattern mostly between $110-$120
with its high closing at $121.68 on Tuesday before its earnings were released yesterday.
 

Next potential resistance may appear near $131.90 if its upwards
trend continues. Initial support appears near $108.25 based on a 3-box reversal
and below this at $102.01. $108.25 could be a key level to watch as it has
traded in this channel since April and it has a pull-back, a break-through this
level could be significant.

With its bullish SMAX score of 9, L.TO is exhibiting strength
against the asset classes. 

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