Act Fast: 75 Only!
Trump’s tariffs have really weighed down Canadian Tire (TSX:CTC.A) shares of late. Undoubtedly, the last thing the iconic retailing titan needs is more supply chain disruptions. And while only time will tell if the Canadian icon can finish the year higher after swinging into the red, I think that the retailer can overcome the threat of Trump tariffs.
Furthermore, Canadian Tire may actually be able to gain a good amount of market share away from rivals as more Canadians opt to not only shop for Canadian goods but also seek to head over to domestic retailers. If anything, the near-term pains from Trump tariffs (think the impact on the supply chain and all the sort) may actually result in a good amount of longer-term gain as Canadian Tire looks to restructure things around with a Canadian twist.
Trump tariffs will be disruptive, but Canadian Tire has managed through crises before
As it stands, Canadian Tire is looking to hit the growth accelerator, with plans to invest around $2 billion in the next four years in efforts that could help spark sales. This “True North” transformation strategy may very well bring back the impressive sales and earnings growth back to a retailer that’s seen its shares stuck in limbo for a considerable amount of time.
In any case, such an effort could help produce significant savings, which can be strategically reinvested in efforts to help Canadian Tire end the year in a better position than it started. With a strong management team investing in all the right areas, I think Mr. Market will have a tough time keeping shares of CTC.A at today’s depressed levels, even if little progress is made on Canada-U.S. trade.
Of course, an economic recession caused by tariffs could weigh down Canadian Tire for quite some time. But for long-term investors willing to look into 2026 and 2027, Canadian Tire actually looks like a pretty decent value. With the sale of Helly Hansen and the expected closure of some number of Atmosphere stores, it seems like Canadian Tire is more than willing to get back to the basics.
Over the years, the iconic retailer has wheeled and dealed its way to have a pretty solid portfolio of exclusive Canadian brands. As the “buy Canadian” mentality persists, the iconic retailer may very well be able to bring aboard a few more cherished domestic brands, as it aims to beckon more shoppers in its doors despite rising inflation and tariff-related headwinds. Only time will tell if Canadian Tire’s new growth-minded game plan will pay off.
Canadian Tire stock looks ultra-cheap
Personally, I think it will, but investors looking to gain will need to give the retailer the time and patience to get the job done. For now, the stock stands out as more of a deep-value play, with shares trading at a mere 9.41 times trailing price to earnings (P/E) to go with an outsized 4.7% dividend yield.
With a beta of just north of 1.0, you’re getting about as much volatility as owning the broad TSX Index. And while the TSX Index has heavily outpaced shares of CTC.A in the past two years (can you believe CTC.A stock is down 19% in the last two years?), I think the “True North” plan can allow the firm to make the most of a tough situation.
