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 has risen 50% from a low of $36.56 last November. That’s mainly because the company is benefiting from its innovative new store designs, which include wider aisles and better lighting. It has also done a good job of managing its financing division during the credit crisis. Moreover, it is making better use of one of its most underappreciated assets — roughly $2 billion in real estate. CANADIAN TIRE CORP. $50 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.5; SI Rating: Above Average) operates 476 stores that sell automotive, household and sporting goods. These account for around 60% of the company’s revenue, and 45% of its earnings. Canadian Tire also owns other retail chains, including 374 Mark’s Work Wearhouse casual-clothing stores, 274 gas stations (many have car washes and convenience stores) and 87 Part-Source auto-parts stores. Mainly on the strength of its store renovations, Canadian Tire’s sales rose 29.2%, from $7.1 billion in 2004 to $9.1 billion in 2008....
CANADIAN TIRE CORP. $50 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.5; SI Rating: Above Average) operates 476 stores that sell automotive, household and sporting goods. These account for around 60% of the company’s revenue, and 45% of its earnings. Canadian Tire also owns other retail chains, including 374 Mark’s Work Wearhouse casual-clothing stores, 274 gas stations (many have car washes and convenience stores) and 87 Part-Source auto-parts stores. Mainly on the strength of its store renovations, Canadian Tire’s sales rose 29.2%, from $7.1 billion in 2004 to $9.1 billion in 2008. Earnings jumped 43.1%, from $3.53 a share (or a total of $291.5 million) in 2004 to $5.05 a share (or $411.7 million) in 2007. The retailer’s 2008 earnings fell to $374.2 million, or $4.59 a share, because of writedowns of currency hedging contracts and gains on the sale of property and equipment. Without these non-recurring items, the company would have earned $572.5 million, or $4.85 a share....
Shoppers Drug Mart, $47.58, symbol SC on Toronto (Shares outstanding: 217.4 million; Market cap: $10.3 billion), continues to upgrade its stores. It is also moving some stores to larger locations. Shoppers may benefit from higher spending on prescription drugs by aging baby boomers. However, the company faces a lot of competition from other expanding drugstore chains, such as Jean Coutu Group (symbol PJC on Toronto) in Quebec and Edmonton-based Katz Group. It also competes with food and department stores with pharmacies. These include Loblaw, Safeway, Wal-Mart and Costco. Shoppers’ shares now trade at a price/earnings ratio of over 18. In contrast, Canadian Tire, $51.60, symbol CTC.A on Toronto (Shares outstanding: 78.2 million; Market cap: $4.0 billion), has a p/e ratio of 10....
AGRIUM INC., $56.82, Toronto symbol AGU, has increased the value of its hostile takeover offer for U.S.-based fertilizer producer CF Industries Holdings (New York symbol CF). This is the second time Agrium has raised its bid. Agrium is now offering $40 per CF share in cash (all amounts except Agrium’s share price in U.S. dollars), plus one Agrium common share. This raises the offer’s cash component by $5. Overall, the new offer is worth $4.2 billion, or 3.2 times Agrium’s 2008 earnings of $1.3 billion, or $8.34 a share. Agrium has a long history of growing through acquisitions, which increases its risk. Still, CF has appeal, as it would triple Agrium’s phosphate and UAN (urea and ammonium nitrate) fertilizer-production capacity. Developing countries, such as China, Brazil and India, will need fertilizer to increase crop yields as their populations grow. Moreover, fertilizer prices are low, and Agrium’s management believes that expanding now will put the company in a good position to profit when they rise again....
CANADIAN TIRE CORP. $45 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $3.7 billion; Price-to-sales ratio: 0.4; SI Rating: Above Average) operates 475 stores that sell automotive, household and sporting goods. It also operates 86 PartSource auto-parts stores, 372 Mark’s Work Wearhouse casual-clothing stores and 273 gas stations. Canadian Tire continues to replace its older stores with new ones that are more shopper-friendly. The new stores have wider aisles, brighter lighting and clearer signage. On average, its stores are a third larger than they were five years ago. These improvements contributed, at least in part, to a rise in Canadian Tire’s sales last year. Its sales rose 6%, to $9.1 billion from $8.6 billion the previous year. Same-store sales rose 0.3%. However, earnings fell 4.5%, to $572.5 million from $599.9 million. Per-share earnings fell 2.2%, to $4.85 from $4.96 on fewer shares outstanding. These figures exclude writedowns of hedging contracts and other items. The earnings drop was largely caused by higher administrative and advertising costs....
Canadian Tire is down 36% from its April 2008 peak of $70. Investors fear that rising unemployment will hurt its sales and increase losses on its credit-card loans. However, the company has been improving its stores. It also owns some of Canada’s best-known brands. These factors give it a big advantage in a highly competitive industry. CANADIAN TIRE CORP. $45 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $3.7 billion; Price-to-sales ratio: 0.4; SI Rating: Above Average) operates 475 stores that sell automotive, household and sporting goods. It also operates 86 PartSource auto-parts stores, 372 Mark’s Work Wearhouse casual-clothing stores and 273 gas stations. Canadian Tire continues to replace its older stores with new ones that are more shopper-friendly. The new stores have wider aisles, brighter lighting and clearer signage. On average, its stores are a third larger than they were five years ago....
NOVA CHEMICALS CORP., $4.76, Toronto symbol NCX, fell 20% this week on fears that the credit crisis will hurt its ability to refinance part of its debt, particularly as the slowing economy has lowered demand for its industrial plastics. Nova’s long-term debt at September 30, 2008 was $1.5 billion U.S., which is equal to 4.7 times its current market cap. This figure excludes a $250-million U.S. bond due in April 2009. Nova has $575 million U.S. in cash and untapped credit lines, so it can easily meet this obligation. The company aims to negotiate better terms for its remaining debt, which includes over $1 billion U.S. due over the next two years. Due to the current economic slowdown, Nova is expanding its cost-cutting program, including reducing its workforce by 15%. These moves should save it $100 million U.S. in 2009 and help Nova pay down its debt....
CANADIAN TIRE CORP. $41 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $3.3 billion; SI Rating: Above average) operates 473 stores that sell automotive, household and sporting goods. It also operates 82 PartSource stores (auto parts), 364 Mark’s Work Wearhouse stores (casual clothing) and 269 gas stations. The company continues to profit from its ongoing plan to make its stores more appealing to shoppers, including wider aisles, better signage and lighting. In the three months ended September 27, 2008, earnings per share rose 12.7%, to $1.42 from $1.26 a year earlier. These figures exclude unusual items. Revenue grew 10.2%, to $2.3 billion from $2.05 billion. Same-store sales rose 2.0%, mainly due to strong demand for winter merchandise. Canadian Tire aims to build on the success of these new stores. It’s now testing several new store formats. These include the “Smart” store, which features more customer help desks and other ways to help shoppers quickly find what they want....
CANADIAN TIRE CORP. $43 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $3.5 billion; SI Rating: Above average) plans to start selling grocery items such as milk, bread and frozen meals at two of its Ontario stores, on a trial basis. The grocery business is highly price competitive. Food also has a much shorter shelf life than Canadian Tire’s traditional merchandise of automotive products, household items and sporting goods. So replenishing food items could be a challenge. However, the company feels that selling food will help encourage repeat visits and expand sales. If this test is successful, it should also help Canadian Tire compete with grocery stores that have expanded their selection of general merchandise....
As I’ve said several times in the past few weeks, you can only spot a market bottom (a reversal in a falling trend in stock prices) in hindsight. Then too, a market can hit bottom, put on a healthy bounce, then go back down to the bottom once again before going on to a lasting rise. But I do feel that a lot of the risk of further decline is now out of the market. My view is that stocks are likely to move substantially higher in the next 6 months to a year, if not sooner. TERANET INCOME FUND $10.10, Toronto symbol TF.UN, has declined to comment on the new takeover offer of $10.25 a unit from the Ontario Municipal Employees Retirement System (OMERS). The new offer is 6.8% below OMERS’ original offer of $11.00 a unit. OMERS dropped its higher bid mainly due to the slowing Ontario economy and falling real estate values. That could hurt demand for Teranet’s electronic land registry services. Meanwhile, Teranet will pay a cash distribution $0.0225 a unit on November 17, 2008. This partial monthly payment will cover the period from November 1, 2008 to the expiry of the OMERS offer on November 10, 2008....