Following the highly publicized acquisition of Whole Foods by Amazon.com, Inc. (NASDAQ:AMZN), investors everywhere have kept a keen eye on how Amazon’s technology will fundamentally change the face of retail for major retailers everywhere. Forecasting the long-term cash flows from retail businesses in direct competition with Amazon is a difficult task, and while much of the recent valuation change for grocery retailers may be warranted, one Canadian company which should be viewed as a relatively insulated option for investors seeking exposure
to retail is Canadian Tire Corporation Limited (TSX:CTC.A).
Canadian Tire’s product offering and big box store format is one which has proven to be a time-tested profitability machine for investors for decades. The company’s niche is in providing quality service to customers seeking a range of products which are difficult to order online and
expensive to ship.
The company’s infrastructure of stores is second to none, with locations spanning the country, enabling the vast majority of Canadians to access a Canadian Tire store within a modest drive from their home, masking some of the downside risk e-commerce options
provide for other retail sectors.
Canadian Tire customers have the option of shopping online and picking up items in store, something which has caught on with many online shoppers who like to review products online before making a purchase. I anticipate the company’s strong earnings growth to continue, and
would recommend interested investors take a deeper look at the company’s strong fundamentals and balance sheet to gain a broader picture of the company’s performance in today’s changing retail environment.
Invest wisely, my friends.
