Friday, February 19, 2010

Canadian Tire Corp 2

I am today continuing my review of Canadian Tire Corp (TSX-CTC.A); because I own it and the unaudited statements for the financial year, ending January 2, 2010 has been published. I first bought this stock in February 2000. On this stock, I have made a return of 10.8% per year. I bought some more shares in June 2009 and on my total investment, I have made a return of 10.7% per year.

The first thing I always check is the Insider Buying and Insider Selling on the stock. The good news is that in the past year there has been some $4M of Insider Buying. However, there also has been some Insider Selling of some $8M of shares. The selling seems to be basically by two officers of the company, so this selling probably does not mean much.

The next thing to look at is the P/E ratio. I get a current one of 11.5. The 5 year average low is 12 and the 5 year average high is 16. It shows a good price if the current one is below the 5 year average low and 11.5 is a fairly low ratio in itself. For the sites that use the last 12 months earnings, the P/E is around 12.5. When I look at the Price/Book Value Ratio, I get a current one of 1.21 and this is about 82% of the long term average of 1.48. This also shows a relatively good price.

I get a current Graham Price of $67.05, so a current stock price of $52.69 is some 21% below. This says that the current stock price is good. Also, when I look at the past history of this stock, it seems that buying it below the Graham Price is when you get the best returns for this company. The last thing to look at is the dividend yield. The current yield is 1.6% and the 5 year average is 1.2%. This also shows a good current price.

When I look at the analysts recommendations, I find Buy, Hold and Underperform recommendations. I can find no analyst that is excited by this stock. Some feel it is undervalued and therefore rate it a Buy. Others are not pleased that the stock came in with lower earnings than expected and there seems to be a lot of Hold ratings because of this. There are also concerns about the Credit Card write-offs by this company. The other thing is that consumer stocks seem to be out of favor. The stocks mostly favored at this time seem to be resource and material stocks.

Certainly, no one will ever make a big score by investing in this stock. However, if you are a long term investor and want to diversify your portfolio into Consumer stocks, then this would be a good stock to buy. As you can see from my return on this stock, I have made good solid returns, but nothing flashy. It would appear that this stock is selling at a good current price. At the moment, I am happy with the amount of stock I have in this company, so I am not personally in the market for more.

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. The company is controlled by the Billes family who own most of the voting shares. Its web site is See my spreadsheet at .

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 for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at Follow me on twitter.

No comments:

Post a Comment