The outlook statement that Metro Inc. attaches to the end of its quarterly earnings report is hardly what you would call loquacious, especially by the standards of more self-promotional companies. It states: "We are confident that we will continue, in the coming quarters, to benefit from our merchandising strategies and retail investment program aimed at maintaining our competitive position." That's it - just 27 words. They add up to this: Trust Us. Investors who have trusted the company's management over the last 10 years have been handsomely rewarded. In that time, Metro shares have appreciated 720 per cent, or a compounded annual rate of 23 per cent. At the same time, the dividend has increased 900 per cent, or a compounded annual rate of 26 per cent. With those kind of numbers, it seems hardly fair that Metro has had to fight for respectability in the Canadian stock market. Its shares have consistently been priced far more cheaply than those of its principal rival, Loblaw Cos. Ltd.

Analysts have constantly worried that the company is destined to stagnate because it has been unable to break out of its Quebec base with a major acquisition. Indeed, it seems that every quarter for a decade CEO Pierre Lessard has been saying he's on the lookout for a property to buy. But the big day never arrives.

In the meantime, however, Lessard and his team have quietly gone about putting up killer numbers year after year. That was the case until midway through the last fiscal year when, suddenly, it seemed that all the doubts about Metro were finally coming to pass. In the second quarter of last year, Metro experienced what is inelegantly known in marketspeak as negative earnings growth for the first time in 13 years. That means the company reported a lower profit than it had the year before. Bay St. analysts nodded their heads knowingly. The story was unfolding as they had predicted. Investors dumped the stock, especially after Metro reported a second down quarter.

But then a strange thing happened. Earnings growth resumed. The stock price shot higher, closing yesterday at $25.70, just below its 52-week high. Now those who sold the stock are kicking themselves for their lack of faith. But they shouldn't be too hard on themselves. Knowing when to sell a stock is perhaps the toughest call in investing and Metro is not an easy case.

On the one hand, Lessard has to be applauded for his cautious approach to acquisitions and his use of the company's cash to boost the dividend and buy back stock - a total of almost 6 million shares over the last five years. He has also spurred growth with new stores, an aggressive renovation program and small bolt-on acquisitions. For a comparison, one only has to think of the money squandered over the years by acquisition-happy companies like Molson Inc. and BCE Inc. to understand the value of a patient CEO. On the other hand, investors are right to be concerned about Metro's limited prospects for a major acquisition.

Private investor Michael Higgs owns Metro stock and keeps a close eye on the company. (I also happen to own a small number of Metro shares). Higgs wasn't scared into selling last year, but he's still worried that this may be turning into a slow-growth story. Higgs sees a warning signal in the company's decision to increase its dividend payout ratio to 25 per cent from the traditional range of 10 to 15 per cent. He wonders if this is a sign of slow growth ahead, although he acknowledges Metro has a strong enough balance sheet to swing a big acquisition. "Why are you raising the dividend, when you say you're looking for acquisitions?" asks Higgs, who operates an excellent dividend- based investing Web site at www.dividend-growth.org. "It really begs the question when they do that." He also notes that Metro's profits and share price are both benefiting from the company's 10-per- cent equity stake in fast- growing depanneur operator Alimentation Couche-Tard Inc. He speculates that one route to go for Metro might be to expand into New England in the footsteps of drugstore operator Jean Coutu Group.

Perhaps Lessard's friends at Couche-Tard could advise him on tackling the tough U.S. market.

Higgs is holding on to his Metro stock, but cautions it looks pricey for new purchases by a conservative investor at current levels. As for knowing when to sell a stock, he believes it takes several quarters to figure out whether a company has just stumbled or is in the grips of a fundamental deterioration of its business.

It's always a tough call, but in the case of Metro, it has paid to be patient.