Unlocking hidden value pays off

Article Excerpt

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. For example, it will soon transfer most of its land and buildings to a new real estate investment trust (REIT). Selling 20% of this REIT to the public could raise $700 million. Canadian Tire is also one of the few retailers in Canada with its own financial services business. The company now plans to sell part of its credit card portfolio, which will cut its risk and give it more cash to invest in its stores. These moves have fuelled a big jump in Canadian Tire’s share price. Even so, we feel the stock has plenty of growth ahead, thanks to the company’s strong brands and new stores. CANADIAN TIRE CORP. $91 (Toronto symbol CTC.A; Conservative Growth…

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