Is North West Company a Retail Stock That’s Worth the Risk?

There’s no denying the risk that comes with investing in the retail industry. Many companies in recent years have shut down their operations. Zellers, Sears Canada, and Target (NYSE:TGT) are some of the bigger names to have closed their doors in Canada.

And with consumers spending more online and deliveries being faster than ever before, things may not be getting any easier for brick-and-mortar retailers.

One stock that could be an exception to that is The North West Company Inc (TSX:NWC). What makes North West unique is the grocery retailer has operations in some of the most remote parts of the country, where competition is either limited or simply non-existent. It also has locations in the U.S. and other parts of the world as well.

The company’s sales have been steadily rising over the years, from $1.8 million in fiscal 2016 to around $2.1 million over the trailing twelve months. North West has also been able to consistently post profits during this time as well. And free cash has also been strong.

Grocery items are a necessity and with a strong position in markets that other retailers don’t want to go into, the company has been able to carve out a good niche for itself that’s likely to continue generating growth.

However, the stock has struggled this year, falling 13% year to date as some underwhelming quarterly results have weighed on the company.

One of its brands, Giant Tiger, has recorded some disappointing numbers which have had investors second-guessing the stock.

But over the long term, North West looks to be a stable buy that today pays investors a dividend of 4.8%.