Steve MacInnes Canadian Tire Corporation Ltd. (A) CTC.A-T BUY May 15, 2008

If worried about Canadian consumer and effects of inflation, not a place you want to be. Incredibly cheap valuation. Bought back a lot of stock last year, but it's cheaper this year. Not a fan of retail, except for COST. Warren Buffett doesn't like retail either.

Still likes it. To make money, you have to buy things that other people don't want to buy. Good job focusing on items that can't be distributed through the mail, thereby fending off online retailers. Rate cuts will help the story. Impressive dividend yield of 5%.

It needs to clear out some of its inventory - major purchases by shoppers are being deferred. It is on his radar and he is watching for a bottom.

He's not big on retail right now. If you're in a good market, you can look at the RSI line for a stock to see how its relative strength is doing compared to the rest of the market. Steadily declining RSI, and the sector's had trouble.

Steer clear. Generally, retail is a tough industry. Not good insulation from online competition. Wary of retail that's not specialty. Would prefer HD, ORLY, or dollar store segment, but wait for pullback.

Tends to be a more economically sensitive retailer. Could benefit from rate cuts and an uptick in discretionary spending. But rate cuts would intensify competition. Good portion of profitability comes from its financial services (credit card) business. 

A contrarian idea, which is how you make outsized returns. Has assembled a nice portfolio of brands over time. Nice job steering customers away from online competition by focusing on bulkier items. Price down due to recession fears. A reversion-to-the-mean play, aiming for 60% return back to all-time high of $215, plus impressive dividend. Yield is 5.2%.

Consumer pullback in spending during a recession is not a risk unique to CTC.A. All retailers face this. Very good profitability, strong balance sheet, trades at 12x earnings.

As a play on the Canadian consumer, it faces higher unemployment and slower economy. Store traffic is slowing.

Continues to slowly grind higher. Likes the technicals, especially if it breaks above the highs of 2023. 

Market approves. Part of an effort to return focus to core retailing. Buying a high-end brand like this was perhaps off-strategy. Good business, but facing headwinds like weaker CAD, trade war risk and potential consequent recession.

Just OK. Better-managed retail out there. Essentially, everything it sells is a discretionary purchase. Also susceptible to tariff risk. Recent retail sales report in Canada shows slowing. Sidestep this one.