Loblaw stock stays RBC's top pick despite premium valuation

RBC Capital Markets has reiterated Loblaw as its top pick in Canada's grocery sector, according to an Investing.com report published Wednesday, November 11. The brokerage argued that the retailer's defensive business model and several growth platforms position it to outperform in an uncertain economic environment.

Loblaw stock traded at 43.60 euros on Lang & Schwarz at 14:07 CET on Thursday, November 12, 2026.

Growth supports the premium

RBC expects companies with strong competitive positions to continue trading toward the upper end of their historical valuation ranges as investors pay a premium for defensive earnings. Within the sector, the brokerage said Loblaw benefits from growth opportunities in its core retail operations and in higher-growth ancillary businesses.

The assessment comes with a valuation caveat. RBC said Loblaw trades at a modest premium to its historical average and to Metro on an enterprise-value-to-EBITDA basis. The brokerage nevertheless considers that premium justified by Loblaw's operating performance and emerging higher-margin businesses.

RBC also pointed to a substantial valuation discount to global best-in-class everyday household retailers. That comparison supports the brokerage's view that Loblaw's relative valuation remains attractive, even after the stock's premium to selected domestic benchmarks.

For investors, the central question is whether Loblaw can convert its retail scale and ancillary businesses into enough earnings growth to defend the premium. The RBC view favors the company's defensive qualities, but the valuation leaves less room for operational disappointment.

Canada's broader market is covered in the S&P/TSX Composite market overview.

More news and analyses on Loblaw stock.

Investing.com reported that RBC Capital Markets had reiterated Loblaw as its top pick.