Canadian Tire Corp

I am reviewing this stock (TSX-CTC.A) today as I have not reviewed it since I received the annual report for the end of December 2008. I bought this stock in Nov 2000 for one of my accounts. My return, including dividend is 11.6% per year. I have bought some more in June of 2009 and this stock has increased by some 57% since that time. I have not had this stock long enough to collect dividends yet.

If you look at the growth figures for this stock, they are mostly a mixed bag. They range from good to ok to very low. For example, the 5 and 10 years growth in earnings, dividends and book value are good. The revenue growth is ok and the stock price and cash flow growth are low or in the case of the cash flow, negative. This is a retail business and the cash flow growth has fluctuated over the years, however, the 5 year running average for cash flow per share has generally gone up, but not always.

When I look at the Asset/Liability Ratios, I like what I see. Both the Liquidity Ratio and Asset/Liability Ratios are very good, with the Liquidity Ratios varying a lot over time. I like to see both these ratios at, at least, 1.50 and over the last few years, both these ratios have been there.

The Return on Equity (ROE) for 2008 was good at only 10.5%. The 5 running average ROE to December 2008 was also good at 12%. The ROE for the first quarter of 2009 was low and it comes in only at 5.6%; however, the year has just started. What I do not like about this first quarter is the low ROE and the fact that the cash flow from operations is negative. With regards to the cash flow, it is expected to improve by year end. I have updated my spreadsheet with the first quarter’s results.

Tomorrow, I talk about what the analysts say about this stock. I am quite satisfied with owning this stock. My return over the long term is great, even though we are currently in a recession. I bought more stock in June 2009 as I thought the price was very low and it turned out to be a good assumption.

They engaged in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. Its web site is corp.canadiantire.ca/. See my spreadsheet at www.spbrunner.com/stocks/ctc.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.