Fifteen years ago, shares in the Northwest Company were trading at $18.17.
Recently they traded at $48.12 — a gain of 264 per cent. That merits investor attention.
Aside from great value creation, the Northwest Company represents a piece of Canadian history.
The Winnipeg-based company was once part of the Hudson Bay Company trading network, known as the Northern Stores.
In 1987, employees bought the Northern Stores division from the Bay. The operation went public in the early 2000s.
The Northwest Company has grown with 13 acquisitions and expanded markets since 2007. The company policy seems to try and serve all the needs of customers.
That policy has led to acquisition of an airline, new stores in the northern parts of the Prairies as well as in Nunavut, the Northwest Territories, Alaska, the Caribbean and the South Pacific.
Thunder Bay-based North Air has 17 aircraft and flies routes connecting northern Ontario communities.
Stores of about 7,500 square feet are in communities with population from 500 to 8,000. Often, they are the only store in town and offer fast food, postal service, and money transfers.
Five Giant Tiger stores are owned by Northwest. The company took on the buildout of Giant Tiger in 2012 with the master franchise for the West. They kept five Giant Tiger outlets after selling the rest.
About three-quarters of sales are food, with about 22 per cent general merchandise.
Operations include fast food, wholesaling food, two dealerships for Honda and snowmobiles, three pharmacies and some wellness centres.
The return on equity, a key measure of profit, was 18.59 per cent in 2024 and has been as high as 25 per cent.
Long-term debt of $295 million sits at a reasonable 37 per cent of shareholder equity.
The dividend has grown frequently, now yielding 3.3 per cent.
Market expansion and acquisitions have built a steadily growing operation. The question for investors is what will the future bring?
The future looks bright with development and population growth of the north’s resources.
A second potential catalyst for growth will arise from the federal interest in protecting Canada’s north with more military supports and infrastructure to allow development
All this, if it occurs, means larger populations to serve, and increased sales.
The eventual growth in the north could be the company’s downside as new competition arrives.
The stock trades at 17 times earnings, not bad compared to the return on equity,
Three analysts following Northwest rate it from a low price target of $59.40 to a high of $63. If the high target is achieved, that would be a 31 per cent gain.
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
