Canadian Tire takes on Lululemon

Article Excerpt

CANADIAN TIRE CORP. (class A) is a buy. The retailer (Toronto symbols CTC $320 and CTC.A $164; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 60.8 million; Market cap: $10.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.canadiantire.ca) plans to launch over 12,000 new private-label products by 2025 as part of its long-term growth strategy. Private label products generate higher profits than national brands. Under that plan, Canadian Tire just launched Forward With Design (FWD), a new activewear apparel brand, for its SportChek chain of sporting goods stores. These new products should help it compete with Lululemon, a popular seller of yoga pants and accessories. Canadian Tire is so confident in its prospects that it is now raising your quarterly dividend by 25.0%. The new annual rate of $6.50 yields a high 4.0%. The class A shares also trade at just 8.5 times the company’s projected 2022 earnings of $19.32 a share. Canadian Tire class A stock is a buy. buy…

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