How bullish are you on the retail sector? What makes Sears Canada a standout pick among its peers?
Sears Canada has a strong position in the Canadian retail environment. The company has performed well during a challenging economic period by effectively managing costs and focusing on profitability over sales growth. Due to monetization of non-core assets (primarily real estate) and strong cash flow generation from the core retail business, Sears Canada has built up significant cash resources on its balance sheet, with $1,113M ($10.35/share) in cash and short-term investments at October 31, 2009. With significant cash resources, strong ongoing free cash flow generation, and significant hidden real estate value, we believe that Sears Canada has many avenues for value creation. Despite above average performance, a fortress balance sheet, and a 10%+ free cash flow yield, Sears trades at a highly discounted valuation of only 4.4x EV/Ebitda. At its current share price, Sears Canada represents a compelling investment opportunity. Drill down on Sears Canada’s competitive environment. The dep
