Paul Harris, CFACanadian Tire Corporation Ltd. (A)CTC.A.TOBUYApr 24, 2023

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.

He missed CTC.A on macro concerns. Great business, one-stop shop, attractive loyalty program. Good company, not expensive, so you can own it for a while.

ATD has done pretty well, but he'd prefer CTC.A for the next year or so.

A very difficult quarter because of a fire and eliminating contracts. Missed numbers. They anticipate slower consumer growth. Could buy here, but will take some time to return to normalized earnings numbers. Good yield of 4.1%.

Really likes how it tries to move away from competing with online retailers. A lot of items are larger or seasonal. Shares down from all-time high of $215. Still more to go, you could still buy here. Well managed, nice dividend. A reversion to the mean with a dividend story, not a growth story.

They've bought brands to help growth, but it's a mature business. Their performance reflects consumer spending. Not excited about it. Little organic growth.

Cheap PE. Over the last 30 years, the stock's traded between a peak of 2.5x book value and a discount of 20% to book. Off peak since May 2021. We're heading into a recession, which won't help retailers and will drive the stock down further.

CTC’A trades at a 9.92x PE, pays a 3.95% dividend yield backed by a safe 33.24% payout ratio. That valuation, by the way, has been the same since last July and is a far cry from July 2020 through June 2021 when it topped 17x. CTC’A is trending above its 50-day moving average of $154.53 and 200-day of $159.03, while the street sees a higher PE of 10.16x. Quarterly revenue growth YOY rose 3.9% and earnings growth 4.6%. Read: Canadian Tire, Savaria & XLI