Happy birthday, Canada.
As we head out for the weekend and celebrate the 150th birthday of our nation, let’s take a moment to consider some of the truly great Canadian investments in the retail sector.
Canadian Tire Corporation Limited
Who doesn’t love Canadian Tire Corporation Limited (TSX:CTC.A)? There is nothing more Canadian than heading to the Tire to get some last-minute part for the car, some camping or sporting equipment, or garden supplies.
Canadian Tire is a shining example of Canadian innovation and success. Just a few short years ago, the company was struggling with branding and plummeting sales and store traffic. Now, the company has set an example for the retail sector on how to adopt technology into the retail process while maintaining a brick-and-mortar physical presence.
Canadian Tire refers to this as a phygital (physical and digital) environment, and it has been key to the company’s turnaround and spearheaded a whole new era of technology projects and innovations that Canadian Tire continues to roll out.
Canadian Tire offers a dividend with a yield of 1.77%, but growth is the to invest in the company. Canadian Tire currently trades at $147 with a P/E of 15.30.
Alimentation Couche Tard Inc.
Alimentation Couche Tard Inc. (TSX:ATD.B) is the largest convenience store and gas station operator in the country, and one of the largest in the world, with a footprint that expands from Canada to the U.S. and parts of Europe and Asia.
Couche Tard has grown impressively over the past few years thanks to a series of impressive acquisitions. The most recent deal for CST Brands Inc. received U.S. antitrust approval recently; Couch Tard’s presence in the U.S. market will increase substantially.
Couche Tard has been looking at expanding further into Asia, where the traditional convenience store model is morphing into more of a destination, which could prove to be a lucrative opportunity over the next few years.
Couche Tard currently trades for just under $63 with a P/E of 24.17. While some investors may see the company’s growth as slowing and the stock is a little on the expensive side, there’s still plenty of upside and growth in store for Couche Tard.
Dollarama Inc.
Dollarama Inc. (TSX:DOL) is arguably the envy of the Canadian retail sector. Dollarama is the largest dollar store operator in the country with over 1,000 locations across the country and a growing presence in Latin America.
That presence in Latin America is thanks to an agreement with the Dollar City chain, which now has locations in Guatemala, El Salvador, and Columbia. Dollarama has the option to buy the chain when the current agreement expires within the next three years.
Despite the explosive level of growth that Dollarama has been subject to over the past few years, experts note that the dollar store market in Canada is nowhere near as saturated as the U.S. market. Growth seems set to continue, as Dollarama has planned to open between 60 and 70 new stores this year.
Part of Dollarama’s success stems from the unique mix of products the company offers and the varying price ranges of those products, up to $4. The price points allow the company to bundle some products together, increasing the perceived value of the goods.
Critics of Dollarama note that the stock trades on a more expensive side, as the stock currently sits with a P/E of 31.77, but Dollarama still holds immense potential for investors. Analysts are forecasting the stock could grow further this year.
