Canadian Tire vs Five Below Which Is More Reliable?

Canadian Tire Corporation Limited (TSX: CTC.A) and Five Below, Inc. (NASDAQ: FIVE) are two companies in the retail sector that cater to different segments of the consumer market. Canadian Tire is a well-established Canadian retailer known for its diverse range of products including automotive, home, and sporting goods, and has a strong presence in the Canadian market. Meanwhile, Five Below is a rapidly growing American discount retailer that targets the teen and pre-teen demographic with its low-priced merchandise. Both companies have shown strong performance in recent years, but their strategies and target markets differ significantly. Investors looking to diversify their portfolios in the retail sector may find these two stocks appealing for different reasons.

Canadian Tire or Five Below?

When comparing Canadian Tire and Five Below, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Canadian Tire and Five Below.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Canadian Tire has a dividend yield of 4.18%, while Five Below has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Canadian Tire reports a 5-year dividend growth of 11.12% year and a payout ratio of 93.42%. On the other hand, Five Below reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Canadian Tire P/E ratio at 22.26 and Five Below's P/E ratio at 17.23. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Canadian Tire P/B ratio is 1.50 while Five Below's P/B ratio is 3.01.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Canadian Tire has seen a 5-year revenue growth of 0.37%, while Five Below's is 1.29%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Canadian Tire's ROE at 7.00% and Five Below's ROE at 18.28%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $108.17 for Canadian Tire and $83.53 for Five Below. Over the past year, Canadian Tire's prices ranged from $91.50 to $120.47, with a yearly change of 31.66%. Five Below's prices fluctuated between $64.87 and $216.18, with a yearly change of 233.25%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.