Thursday, February 18, 2010

Canadian Tire Corp

I am today reviewing 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.

If you look at my spreadsheet, you will see that an investment made 10 years ago, that is in 1999, would have made just 6.6% and one made 5 years ago in 2005 would have gain just 1.7%. When I bought this stock in both 2000 and 2006, I did not get it at the absolute lowest price, but I did get the stock at a reasonable price. In 1999 and in 2005, the stock had hit peaks or had a very good run up in price. What is important is to not buy stocks at their peaks. (Although, I must admit, this might be easier said than done.)

This is a retail stock. The dividends are not great coming in at an average yield of 1.2%. However, this stock has a decent record of dividend increases. Over the past 5 years, the dividend has increased at a rate of 11% per year. The 10 year growth in dividend is lower at 7.7%. Both are good figures. I did my original investment some 9 years ago and on my original money, I am making a 3.8% return in dividends.

For this stock, since it did not do very well last year, the growth figures are by and large not very good. Retail stocks tend to get hit hard by recessions. The best growth rates are, after dividend growth, the growth in Book Value. The 5 and 10 year growth figures are 7.7% per year and 10.2% per year. The Growth in revenue, earnings and cash flow were not good.

The last thing I want to talk about today is the Liquidity and Asset/Liability Ratios. Both these ratios are very good. The current Liquidity Ratio is 1.99 and the A/L Ratio is 1.72. These ratios have 5 year averages of 1.73 and 1.85. Let’s face it, the main reason people lose money on a long term investment is if the company goes bankrupt. This company has a solid balance sheet. However, I should mention that they do have their own credit card business, and this can cause problems for a company, especially in recessions.

I am happy with stock and I plan to continue to hold my Canadian Tire shares. Tomorrow, I will talk about whether or not this is a good time to buy shares in this company and what stock analysts say about it.

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 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.

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