canadian tire

SNC-LAVALIN GROUP INC., $42.59, Toronto symbol SNC, fell 5% this week after it cut its 2013 earnings outlook, mainly due to one-time losses on certain fixed-priced engineering contracts it signed between 2010 and 2012. The nature of these deals, which include hospitals, roads and unspecified projects in North Africa, prevents SNC from passing along unexpected cost increases to its clients. The company also expects that a previously announced reorganization of its European operations will cost an extra $75 million. At the same time, weak prices for gold and other commodities have slowed construction of new mining projects. As a result, SNC will probably earn $10 million to $50 million in 2013. That’s a big drop from its earlier prediction of $220 million to $235 million....

RIOCAN REAL ESTATE INVESTMENT TRUST $24.19 (Toronto symbol REI.UN; Units outstanding: 300.7 million; Market cap: $7.3 billion; TSINetwork Rating: Average; Dividend yield: 5.8%; www.riocan.com) is Canada’s largest real estate investment trust (REIT), with interests in 348 shopping malls containing over 83 million square feet of leasable area....

CANADIAN TIRE CORP., $92.02, Toronto symbol CTC.A, has announced more details of its plan to spin off most of its real estate holdings as a new, publicly traded real estate investment trust (REIT). This new REIT, called CT Real Estate Investment Trust, will hold 72% of Canadian Tire’s real estate assets, including 255 stores and one distribution centre. Canadian Tire will be CT REIT’s major tenant, accounting for 95.7% of its rental income. The average lease term is 16 years for the retail stores. Canadian Tire will also sign a new deal to lease the distribution centre for 17 years....

CANADIAN TIRE CORP. $91 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.5 million; Market cap: $7.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 490 Canadian Tire stores, which specialize in automotive, household and sporting goods. The company owns these outlets, but franchisees operate most of them. Canadian Tire also operates 300 gas stations and 87 PartSource auto parts stores.

In the 1990s, big U.S. retailers like Wal-Mart and Home Depot expanded to Canada. In response, Canadian Tire upgraded its stores with better signage, wider aisles and brighter lighting. These improvements also made it easier for managers to move faster-selling seasonal merchandise to high-traffic areas of the store.

The company is also trying out new formats. For example, it recently opened a smaller store in Toronto. This outlet, called Canadian Tire Express, is one-third the size of a regular Canadian Tire store and mainly features items like light bulbs and plumbing parts instead of tires and lawnmowers.
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TIM HORTONS $58.56 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 153.1 million; Market cap: $8.8 billion; Dividend yield: 1.8%) operates 3,468 coffee-anddonut shops in Canada, 807 in the U.S. and 29 in the Persian Gulf.

In the three months ended June 30, 2013, Tim Hortons’ sales rose 1.9%, to $800.1 million from $785.6 million a year earlier....

When we look for stocks to buy, we pay special attention to hidden value. If you’re a long-time reader, you know we’ve talked about hidden value many times over the years. It came up again in our analysis of Canadian Tire, which appeared on the front page of last week’s issue of The Successful Investor. Canadian Tire is one of my long-time favourites. I advised buying it in the first issue of The Successful Investor in 1995, when it was close to $10 a share. At that time, many Canadians were wary of the stock because they feared it would suffer greatly when Wal-Mart made its long-anticipated entrance into Canada. Canadian Tire seems to have survived Wal-Mart’s entrance. Of course, its stock price has gone through a couple of deep setbacks since 1995. It peaked at around $45 in the summer of 1999, then got down close to $16 in the fall of 2000. It rose to $88 at the market peak of fall, 2007, and fell to $37 by early 2009. It fell from $69 to $52 in the first nine months of 2011. Then it resumed its rise and recently hit an all-time high above $91....

We’ve long recommended Canadian Tire, even in the face of strong competition from Wal-Mart and other big U.S. retailers. That’s due to its hidden assets, which investors tend to overlook.

The company is now taking steps to unlock the value of these assets....

CANADIAN TIRE CORP., $89.56, Toronto symbol CTC.A, rose 6% this week after the company reported better-than-expected earnings. In the three months ended June 29, 2013, Canadian Tire’s earnings rose 15.9%, to $154.9 million from $133.7 million a year earlier. Earnings per share rose 17.2%, to $1.91 from $1.63, on fewer shares outstanding. That easily beat the consensus estimate of $1.80 a share. Sales rose 1.0%, to $3.02 billion from $2.99 billion. Same-store sales gained 2.0% at the company’s 490 Canadian Tire stores, thanks to strong sales of automotive and kitchen goods. Higher demand for seasonal merchandise, like bicycles and patio furniture, also contributed to the higher results....

TIM HORTONS $58.56 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 153.1 million; Market cap: $8.8 billion; Dividend yield: 1.8%) operates 3,468 coffee-anddonut shops in Canada, 807 in the U.S. and 29 in the Persian Gulf.

In the three months ended June 30, 2013, Tim Hortons’ sales rose 1.9%, to $800.1 million from $785.6 million a year earlier. Same-store sales increased 1.5% at its Canadian outlets and 1.4% in the U.S. Earnings per share rose 17.4%, to $0.81 from $0.69.

The company continues to benefit from new menu items it has recently introduced, such as panini sandwiches. It also raised its prices to cover higher ingredient costs.
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CANADIAN TIRE CORP. $83 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.9 million; Market cap: $6.7 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.canadiantire.ca) has a new four-year deal to sell Olympic-branded shoes and other sports equipment made by Adidas Group. The company will feature this merchandise in its main Canadian Tire stores and its SportChek and Sports Experts sporting good chains.

Offering exclusive products is a good way for retailers to draw customers to their stores. This new deal also builds on Canadian Tire’s current eightyear sponsorship agreement with the Canadian Olympic Committee.

Canadian Tire is a buy....