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Dollarama Inc. (DOL)
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Canadian Tire Corporation Limited Class A Non-Voting Shares (CTC.A)
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Alimentation Couche-Tard Inc. (ATD)
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Aritzia Inc. Subordinate Voting Shares (ATZ)
Q: Just looking for an updated view of Canadian Tire. Think there will be much of a retail bump with all the suggested “ tax breaks”.?
5i Research Answer:
It is true that the tax break could be a short-term boost in earnings for retailers like CTC.A. However, we don’t think investors should invest just on that basis alone. CTC.A is still a mature retailer; growth is expected to be around 3% going forward. CTC.A’s debt level is also quite high, the net debt/EBITDA is around 5.6x. It is kind of a value name that generates strong cash flow, but we are quite uncomfortable with the high debt levels. We think there are more attractive opportunities in the market such as DOL, ATD, or ATZ.