Every Tuesday we bring you “Best Canadian Stocks” as our daily post. In these posts, you get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves that are profiled in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.
“Best Canadian Stocks” is part of our new approach offering you regular buy, hold and sell advice in our daily posts. Every week you get “A Stock to Sell” on Monday, “Our Top U.S. Stocks” on Thursday and on Friday, our advice on one of the stocks our Inner Circle members have asked about in their weekly Question & Answer sessions.
A key part of successful investing involves picking stocks with hard-to-replace assets, like popular brand names.
Canadian Tire is a leading example. It has built its brand over decades, and become synonymous with Canada. That gives it a big advantage when launching new products and competing with bigger U.S. chains.
CANADIAN TIRE CORP. (Toronto symbol CTC.A; www.canadiantire.ca) operates 492 Canadian Tire stores, which specialize in automotive, household and sporting goods. It also owns other retail chains, such as Mark’s (casual clothing) and SportChek.
The company is selling 20% of its credit card operations to Bank of Nova Scotia (see page 74) for $500 million. Canadian Tire has an option to sell an additional 29% to the bank over the next 10 years.
Pat McKeough seeks out the hidden value that brings spectacular gains where you least expect them—from well-established, dividend-paying Canadian stocks. He covers the best of these stocks in The Successful Investor.
Pat recommends three portfolios for our readers—the Conservative Growth Portfolio, the Portfolio for Income-Seeking Investors and the Aggressive Growth Portfolio. According to undisputed independent authority on investment newsletters, Hulbert Financial Digest, every one of those three portfolios returned better than 10% compounded annually over 10 years. As a new subscriber, you can save $50.00 on a no-risk introductory subscription. And this week you will begin getting updates and advice in the weekly Successful Investor Email/Telephone Hotline. Click here to take advantage of this special offer right away.
Canadian stocks: Advertising during Winter Olympics depresses earnings but lifts sales
Meanwhile, Canadian Tire earned $70.6 million in the quarter ended March 29, 2014, down 3.3% from $73.0 million a year earlier. Earnings per share fell 2.2%, to $0.88 from $0.90, on fewer shares outstanding.
The decline is mainly because Canadian Tire spent more on advertising during the Winter Olympics. However, these promotions helped lift its sales by 3.8%, to $2.6 billion from $2.5 billion.
Same-store sales fell 0.5% at the 492 Canadian Tire outlets, as colder-than-normal weather hurt demand for gardening equipment and other spring-related products. However, same-store sales rose 6.4% at the company’s 417 sporting goods stores, including Sport Chek and Sports Experts. Same-store sales gained 2.9% at the 382-store Mark’s casual-clothing chain.
The company should earn $7.27 a share in 2014, and the stock trades at 14.2 times that forecast. The $2.00 dividend yields 1.9%.
Canadian Tire is a buy recommendation of Pat McKeough’s flagship advisory, The Successful Investor.
If you’re a member of Pat’s Inner Circle and you’d like to ask a question about today’s article, please go to the question page reserved for you (be sure you’re logged in first). Click here to ask your question.
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Every Tuesday we bring you “Best Canadian Stocks” as our daily post. In these posts, you get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves that are profiled in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.
