North West is still around today. It’s a specialty retailer focusing on Canada’s northern communities, as well as having department stores in larger communities. It’s often the only store in remote northern communities, giving it the freedom to almost charge whatever it wants.
The company has shifted its focus to its international operations in recent years, increasing sales by more than 20% in markets like Alaska, the Caribbean, and the South Pacific since 2013.
Analysts think this growth will continue. Earnings expectations are $1.53 per share for this year, increasing to $1.62 per share next year. That puts shares at 16.4 times forward earnings, a very reasonable valuation.
North West Company shares have struggled of late, falling to a fresh 52-week low for two reasons. Canada’s north is a resource-based economy, and is experiencing some weakness.
Additionally, there has been some negative media attention about the prices charged for food in remote communities. Critics argue high food costs are keeping already struggling residents poor.
Others contend that high food costs are a simply a reality of living so far away from major population centers. Supplies must be flown in, an expensive method of transport even if oil is struggling.North West shares currently pay a dividend of 31 cents per quarter, giving it an attractive yield of 5%. The company has a payout ratio of 81%, which is reasonable.
