Canadian Tire Corporation Ltd. (A) (CTC.A-T)

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

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

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.

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. 

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.

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.

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%.

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.

Retail stocks will tick up if we avoid a recession, inflation continues to fall, and if interest rates decline. CTC has done great acquisitions. Well-run.

They've done well competing with online retailers like Amazon by focusing on cars, gardening furniture and sports equipment. Shares are down 40% from its 2021 peak, so it's a good opportunity now. Solid balance sheet and pays a good dividend yield.

Getting more attractive. Impressive general margins last quarter. Reasonable at under 9x, nice dividend that grows well. Earnings picture clouded by softening demand, higher oil prices, higher rates. Better stocks at this time.

Historically this has gone from strength to strength. People will always buy skates, fix their cars or paint their homes. But discretionary spending always flags in a recession or downturn.

Has a financial services division, so delinquencies could tick up in this economic environment. Not a strong unit growth grower. Well penetrated in Canada. Traffic could soften, stock's pulled back. Not interested.

Pulled back on earnings and consumer sentiment. Time to look at it, and he is. Hasn't stepped in yet as he completes his research. Meets his quality criteria. Phenomenal franchise in Canada. Nothing wrong with the business, it's just economically sensitive. Well run, fantastic financial shape.

Avoid. Consumer discretionary. Not a lot of great growth opportunity here. Consolidation around $140-160. The Consumer Index is slowing down and will affect stocks like this.