Weekly Issue #1
Welcome to the first Travis Valuation letter. Every week I run one North American stock through the same Benjamin Graham checks the tool runs — plain English, no hype — then tell you which Canadian account to hold it in. The only question that matters: is it actually worth the price?
Canadian Tire (TSX: CTC.A) — ~$202
Everyone knows Canadian Tire. And “a company I trust” is exactly what gets people to buy a stock without asking whether it’s worth what it costs. So let’s ask — here’s the scorecard, then the detail.
| The check | Reading | Verdict |
|---|---|---|
| Cheap on earnings? (P/E) | 15.8 | ⚠ Just over the line |
| Cheap on assets? (P/B) | 1.8× | ⚠ Slightly rich |
| Pays its bills? (interest cov.) | 6.6× | ✓ Comfortable |
| Distress risk (Altman / Piotroski) | 2.0 / 6-of-9 | ⚠ Middling |
| Deep bargain? (net-net) | No | – |
| Below fair value? (Graham #) | $178 vs $202 | ⚠ ~13% over |
Bottom line: a solid business, but priced above fair value today — no margin of safety.
1. Price vs earnings (P/E): 15.8 — just over Graham’s ceiling of 15 — about a 6.3% earnings yield. Fair, but no longer a discount.
2. Price vs book (P/B): 1.8× — a bit above Graham’s 1.5 line — though much of that book is tangible (real estate, stores, inventory).
3. Can it pay its bills? Yes. — interest covered about 6.6× over, current ratio ~1.9. Comfortable on that front.
4. Distress risk — softening. — Altman Z is 2.0, right at the bottom of the grey zone, and Piotroski has slipped to 6 of 9 — decent, not the standout it was. The credit-card arm loads the balance sheet like a lender’s, so the manufacturer-built Altman reads harsher than reality — but the quality signals have cooled.
5. A deep Graham bargain (net-net)? No — — and that’s normal. True net-nets live in the market’s junk drawer, not among national icons.
6. One number — the Graham Number: — √(22.5 × ~$12.80 EPS × ~$110 book) ≈ $178. The stock trades at $202 — about 13% above fair value.
The price I’d wait for
Below its ~$178 Graham Number — ideally back toward its high-$150s 52-week low. At $202 there’s no margin of safety. Watchlist it and name your price. Patience is a position.
Which account?
Canadian Tire pays an eligible Canadian dividend — no US withholding tax to worry about here. It compounds best in a TFSA (dividends and growth, completely tax-free); in a non-registered account the dividend still qualifies for the Canadian dividend tax credit. Save your RRSP room for US dividend payers — more on that another week.
The point: AI, a Reddit thread, or your brother-in-law will tell you Canadian Tire is a great Canadian company. They’re right — and it’s the wrong question. Great company is not the same as great price.
Free — then run any US or Canadian stock you like.