canadian tire
Toronto symbol CTC.A, operates stores that sell automotive, household and sporting goods. It also operates PartSource auto parts stores, Mark’s Work Wearhouse casual clothing stores and gas stations.
CANADIAN TIRE CORP. $61 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.4 million; Market cap: $5.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.canadiantire.ca) is buying The Forzani Group Ltd. (Toronto symbol FGL), which sells sporting goods through over 500 stores in Canada, including SportChek and Athlete’s World. Forzani gets 70% of its sales by selling clothing and footwear. So there is little overlap with the sports equipment, such as skates and hockey sticks, that Canadian Tire stores mainly sell. The $771-million purchase price is equal to 1.7 times the $453.6 million, or $5.56 a share, that Canadian Tire earned in 2010. The deal should close in the third quarter of 2011....
Real estate investment trusts (REITs) are exempt from Ottawa’s income-trust tax, which came into effect January 1, 2011. That exemption makes REITs’ high yields more attractive, because most trusts have converted to corporations or cut their distributions in response to the new tax. Our REIT recommendations have all moved up, but we still think they offer attractive long-term returns at relatively low risk. ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $23.52 (Toronto symbol AP.UN; Units outstanding: 46.2 million; Market cap: $1.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.6%) owns office buildings in Toronto, Montreal, Quebec City and Winnipeg. These mainly Class I properties contain over 6.3 million square feet of leasable area. Class I refers to 19th and early 20th-century light industrial buildings that have been restored and converted to office and retail space. These properties usually feature high ceilings, natural light, exposed beams, interior brick and hardwood floors....
RioCan Real Estate Investment Trust, symbol REI.UN on Toronto, operates 297 retail properties in Canada, mainly outdoor shopping malls. It also owns 31 malls in the U.S. through joint ventures, including its partnership with Cedar Shopping Centers Inc. (New York symbol CDR). RioCan owns 80% of the joint venture with Cedar, and 14% of Cedar itself. In 2010, the real estate investment trust’s revenue rose 17.0%, to $887.0 million from $758.0 million in 2009. The real estate investment trust’s earnings jumped 166.0%, to $303.0 million from $113.9 million in 2009. Earnings per unit rose 151.0%, to $1.23 from $0.49, on more units outstanding. The increase was mostly due to a one-time non-cash reversal of future income tax charges. In 2010, RioCan acquired 19 properties in Canada and 29 in the U.S. for a total of $986 million....
Transcontinental Inc., symbol TCL.A on Toronto, is the largest commercial printer in Canada and Mexico, and the fourth-largest in North America. It also publishes newspapers and magazines. Transcontinental also has over 250 web sites. These web sites will become more important to the Canadian stock’s growth in the next few years, as advertisers spend more on the Internet than print products. In the three months ended January 31, 2011, Transcontinental earned $29.9 million, or $0.37 a share. That’s up 10.3% from $27.1 million, or $0.34 a share, a year earlier. These figures exclude writedowns and other non-recurring items. On this basis, the Canadian stock’s latest earnings beat the consensus estimate of $0.36 a share. Revenue rose 3.6%, to $530.1 million from $511.6 million....
The Canadian retail sector is highly competitive. Aside from other domestic retailers, Canadian consumer stocks are facing increasing competition from large U.S. discount retailers, like Wal-Mart and Costco. In addition, popular U.S. retailer Target is set to enter the Canadian market. As the competition between retailers continues to heat up, it’s more important than ever for investors to focus on Canadian retail growth stocks with a proven ability to adapt and prosper in the fast-changing retail landscape. In a just-published issue of The Successful Investor, we take a close look at Canadian Tire Corp. (symbol CTC.A on Toronto). The company has been improving the layout of its stores over the last 15 years, and adding new items to the merchandise they carry. It has also acquired and launched a number of new businesses....
BANK OF NOVA SCOTIA, $57.66, Toronto symbol BNS, reported record earnings this week. That prompted the bank to raise its dividend. In its 2011 first quarter, which ended January 31, 2011, Bank of Nova Scotia earned a record $1.2 billion. That’s up 18.8% from $988 million a year earlier. Earnings per share rose 17.6%, to $1.07 from $0.91, on more shares outstanding. That beat the consensus earnings estimate of $1.06 a share. Revenue rose 5.6%, to $4.1 billion from $3.9 billion. The bank continues to set aside less money to cover bad loans because of the improving economy; that was the main reason for the higher earnings. In the latest quarter, loan-loss provisions fell 27.5%, to $269 million from $371 million a year earlier....
LOBLAW COMPANIES LTD. $39 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; 280.6 million; Market cap: $10.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.loblaw.ca) aims to open 20 stand-alone “Joe Fresh” clothing and accessories stores over the next few years. It already has one store in Vancouver, and plans to open five more outlets in 2011: three in Toronto, one in Calgary and one in New York City. However, the company faces growing competition from non-food retailers like Canadian Tire that have started selling groceries. As well, Wal-Mart plans to open 40 new grocery stores in Canada this year. Rising food costs could also squeeze Loblaw’s profit margins. Loblaw is a hold....
CANADIAN TIRE CORP. $62 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.4 million; Market cap: $5.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.canadiantire.ca) is in better shape than Loblaw to compete with big U.S. retailers like Wal-Mart and Target. That’s largely because its unique mix of automotive, household and sporting goods has made it Canada’s best-known retailer. The company gets 55% of its earnings and 60% of its revenue from its 482 stores across Canada. It owns 70% of these stores, but franchisees operate all of them. The company’s 272 gas stations also encourage repeat visits. Moreover, newer retail chains like its 378 Mark’s Work Wearhouse casual-clothing stores and 87 PartSource auto-parts stores are helping Canadian Tire attract more customers....
BCE INC., $35.90, Toronto symbol BCE, continues to profit from recent upgrades to its wireless and high-speed Internet networks. As a result, BCE’s earnings rose 11.9% in 2010, to $2.2 billion from $1.9 billion in 2009. The company spent $500 million on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 13.6%, to $2.84 from $2.50. These figures exclude costs related to a restructuring plan, which included cutting jobs, relocating employees and selling excess real estate. The latest earnings also beat the consensus estimate of $2.83 a share. Revenue rose 1.9% in 2010, to $18.1 billion from $17.7 billion. Wireline revenue (which accounts for 57% of BCE’s total revenue) rose just 0.3%. New high-speed Internet and satellite-TV subscribers offset lower local and long-distance telephone revenue. At the end of 2010, the company had 2.1 million high-speed Internet subscribers (up 2.0% from a year earlier) and 2.0 million TV subscribers (up 3.7%)....