Meme stock investors tend to be focused right now on highly leveraged bricks-and-mortar retail plays. Indeed, these Reddit-inspired investors have taken some TSX stocks on incredible parabolic routes. However, stocks like Canadian Tire Corporation (TSX:CTC.A) seem to continue to fly under the radar for some reason.
Here’s why this stock is definitely on my radar right now, irrespective of its position amid current market dynamics.
Let earnings do the talking
Even seemingly without the meme stock tailwind, Canadian Tire has been surging throughout the pandemic and continues to do so this year. In fact, I’d argue this long-term growth stock in the retail space has its own set of fundamental growth catalysts that make the meme stock surge moot.
It appears that many Canadian investors agree with this sentiment.
In recent years (prior to the pandemic), Canadian Tire was in hot water due to its heavy investment in what was viewed as an inferior e-commerce platform. The company continued to expand its offering, and I wrote continuously about the long-term benefits of this omnichannel strategy.
Fast forward to 2020, and these investments certainly make Canadian Tire’s management team look very smart. The company’s impressive earnings throughout the pandemic are a direct results of these investments. A whopping 179% growth rate in Canadian Tire’s year-over-year revenue attributed to e-commerce highlights this fact.
The fact that Canadian Tire was able to more than offset declines in foot traffic in its physical stores due to its e-commerce strength is notable. For long-term investors, it’s important to consider companies that are investing the money up-front for long-term growth. Canadian Tire is one of the best retailers in this regard.
The long-term prospects of Canadian Tire remain strong. The company launched a new loyalty program by the name of Triangle, which has started contributing to its success. Investors will also note the company’s success in moving to exclusive private label brands, which will accelerate its growth even further.
I remain very bullish on Canadian Tire as a long-term retail holding. It’s not a sexy play by any means. However, this company sure does have strong fundamentals and a management team that knows what they’re doing.
Yes, the incredible e-commerce growth we’ve seen of late may be a short-term phenomenon. However, Canadian Tire is a brand that Canadians love, and its popularity among consumers is not going to fade, even if they return to their old offline shopping ways.
Like this top pick? We've got a few more for you to consider right now:
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned.