North West Co. $30.64 - Toronto symbol NWC

NORTH WEST CO. $30.64 (Toronto symbol NWC; TSINetwork Rating: Extra Risk) (604-231-1100; www.northwest.ca; Shares outstanding: 48.5 million; Market cap: $1.5 billion; Dividend yield: 4.1%) sells food and everyday products and services through 225 stores, mainly in northern communities across Canada and Alaska. It also operates stores in remote regions of Hawaii, the South Pacific and the Caribbean. North West is new to Stock Pickers Digest. Ottawa-based Giant Tiger signed a 30-year deal in 2002 that granted North West the exclusive right to open and operate Giant Tiger stores in Western Canada. Giant Tiger operates 200 general merchandise discount stores. In Canada’s north, North West operates the majority of its stores (122) under the Northern banner, followed by Giant Tiger (33), Quickstop (12) and NorthMart (6). The company gets about 60% of its revenue from Canada. The remaining 40% of sales comes from 33 stores in Alaska, as well as its 13 Cost-U-Less mid-sized warehouse stores in remote island communities in the South Pacific and the Caribbean. In its fiscal 2016 third quarter, which ended October 31, 2015, North West’s sales rose 10.8%, to $458.0 million from $413.5 million a year earlier. Earnings per share rose 16.2%, to $0.43 from $0.37. If you exclude currency gains, earnings rose 5.2%. The company will probably earn $1.84 a share in 2016, and the stock trades at 16.7 times that forecast. Oil and mining firms continue to lay off workers and spend less on new projects in northern Canada and Alaska. That will hurt North West’s results, but the high U.S. dollar is helping offset that by significantly boosting the contribution from its stores outside of Canada. North West Company is a buy.

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