Canadian Tire Corporation Ltd. (A) (CTC.A.TO)

It has a strong seasonal period at this time. It averages 8.9%, 90% of the time. We saw a correction earlier in the month. (Analysts’ target: $188.46).

This is continuing to grow by acquisition, shows good earnings, competes well, and looks like a great opportunity going forward. (Analysts’ price target is 187.77$)

They weathered all the storms with online shopping and with competitors coming to Canada. They have a decent PE of 16 times, a decent yield. They have good quality earnings with 15% ROE. It has good valuation and the type of stock he looks for.

Hasn't been too positive on Canadian retail, but this has actually done quite well. They may have gotten some of Sears’ business. Also have been working on their online and reformatting their stores, which has been doing well for them. This is probably the best of the group, but she is not sold on retailers.

It is slightly below market yield at 2.2%, but a very modest 21% payout. They reported in November. Year-over-year sales were up 12%. EBITDA per share was up 7%. Free cash flow yield improved and went from negative to positive. Their ROE on a trailing basis is 14.4% but forecasted to rise 16.7%. (Analysts' price target is $184.)

This has very strong seasonality. It normally starts around the end of January, and moves through until springtime. It’s been in a trading range for the last couple of weeks, and will probably be there for another 2-3 weeks until about the middle of January. That will be the time for an opportunity.

He love this company. Seasonal period for this is from October 28th to end of November. If we look back, Canadian Tire actually has an extremely weak January. It’s part of retail and retail tends to be weak in January. It’s actually only outperformed the TSX Composite 17% of the time in January. He would wait until the end of January into February to pick up this stock.

The chart looks interesting. It’s above the 200-day and the 50-day. It really has been sideways for the last little while. (Leadership in retail has been Dollarama (DOL-T).) This has a 14X earnings with about a 10% growth rate, so you are looking at 1.3X earnings. To him this is neutral. He’s a little concerned about minimum wages moving higher which might hit. He is neutral on the name.

Recently came out with earnings which were excellent. Seem to be delivering across all their business lines. The dividend increase of 40% was quite strong. They are trying to get all their different retail properties to work as one.Recently came out with earnings which were excellent. Seem to be delivering across all their business lines. The dividend increase of 40% was quite strong. They are trying to get all their different retail properties to work as one.

The line in the sand for him is $142. If it goes below that, there is something wrong with the story. There is some deeper support at around $130. The chart shows a really nice trend and he would stick with this.

(Market Call Minute) It is operating well but it is two multiple turns more expensive than usual so he would not chase it here.

Not a big fan of retailers in general, and this isn’t a good entry point. A better choice would be CT Real Estate Investment Trust (CRT.UN-T), a nominal bond proxy, but you get a decent yield. Canadian Tire is their tenant.

He is wary about retail in general because of Amazon. However, you would think people would buy their tires in person rather than online. A lot of the stuff that you buy in stores could be bought through Amazon. Online retail is less than 10% of the market, but has had a dramatic effect, primarily on margins. He doesn’t think he would be buying this company.

Retail sales in Canada are extremely strong, and were up about 7.3% year-over-year as of June. This company is a direct play on that. This is vulnerable to the Amazon (AMZN-Q) impact, but that is down the road.

(A Top Pick May 13/16. Up 10.81%.) There is no real reason for the recent pullback. He still likes it and it is cheap. 1.7% dividend yield is fairly light for being an established business. Trading at around 15X. Still buying for new clients.