The entire retail sector has seen the effects of traditional bricks and mortar retail toward an e-commerce-based retail model. In this context, retailers such as Canadian Tire Corporation (TSX:CTC.A) have sold off alongside the broader sector during this recent market turmoil, in my opinion, to a degree that was truly unwarranted. In this article, I am going to describe why I am bullish on Canadian Tire short-term.
The Canadian Tire portfolio of brands is strong, particularly in the company’s core domestic market. A number of analysts have pointed to better than expected performance at the company’s non-Canadian Tire banners, and have also pointed to fundamental strength relative to peers that should drive stock price performance and outpace the sector coming out of this recession.
Another key facet of Canadian Tire’s core business I do not think gets enough attention is the relatively insulated nature of the company’s core business.
Buying tires or maintenance services/auto parts is not well-suited to online platforms (at least thus far), making the company’s revenue streams far more stable than other retailers selling items that may easily and inexpensively be shipped to the end consumer.
At roughly two-times sales, Canadian Tire’s valuation multiple is relatively inexpensive compared to other comparable retailers right now. I would encourage long-term investors interested in picking up great long-term plays to consider Canadian Tire as a great value pick.
Invest wisely, my friends.
