Broader stock markets are getting wobbly again, with U.S. jobs numbers within the sights and up to date hawkishness from the Fed. Despite the return of volatility, Alimentation Couche-Tard (TSX:ATD) stock continues to stay solid.
Undoubtedly, the convenience store behemoth was fairly tame in the course of the euphoric market rise of 2021 and the selloff of 2022. It’s the epitome of stable value and appears in an incredible position to weather what’s more likely to be a recession yr.
Indeed, when times get turbulent, boring is gorgeous. And at this juncture, I find few firms as beautiful as Couche-Tard. With a rock-solid balance sheet and enough dry powder to make considered one of its largest deals to this point, I remain a raging bull on the Quebec-based convenience retailer that, in some ways, remains to be run like a family business.
Couche-Tard: Wheeling and dealing (at a smaller scale) should drive earnings growth
Though Couche-Tard hasn’t had much luck when occurring the hunt for big-scale international deals (the pursuit of French grocer Carrefour was rejected nearly immediately), it’s price noting that Couche has been making smaller-scale deals while continuing to take a position within the in-store experience.
Recently, the Quebec-based retailer quietly scooped up Big Red stores and membership interests in True Blue carwashes. Such deals are small in nature, but such small deals mustn’t go ignored. Every little deal is more likely to help drive earnings growth and value.
Couche-Tard knows that paying less to get more and driving synergies is the important thing to unlocking value for its shareholders. Few firms do mergers and acquisitions (M&A) higher than Couche’s managers — at the very least on such a consistent basis!
The rise of EVs could possibly be a plus for Couche-Tard stock
The corporate isn’t just attempting to drive near-term same-store sales growth numbers, Couche-Tard is making moves to enhance its long-term positioning.
Indeed, the rise of EVs (electric vehicles) will weigh heavily on fuel sales over the subsequent decade. As Couche-Tard pushes so as to add more EV chargers at its stations while improving upon its merchandising offerings, I view Couche-Tard, as an evolving earnings growth story.
Undoubtedly, not all convenience store operators are financially equipped to cope with the rise of EVs. Smaller-scale convenience stores and gas station firms (a lot of Couche-Tard’s peers) may not have the financial flexibility to make big investments in the long run. It’s these such firms that may face essentially the most pressure as more EVs hit the roads.
Arguably, Couche-Tard is an incredible candidate to benefit from the pains of its peers, as they struggle to adapt to the brand new age. With that, I think Couche-Tard will give you the chance to get incredible value from M&A in time.
Couche-Tard’s balance sheet stays robust. With rates continuing to surge, money will probably be king. And Couche-Tard may have much more growth levers it might probably pull.
The underside line on Couche-Tard stock
Couche-Tard stock stays an incredible value, because it continues to carry up within the face of the stock market selloff.
The stock is lower than 2% from its all-time high and trades at just 16.7 times trailing price to earnings (still so low for a defensive growth icon). I’m a fan of the long-term strategy and the road going right into a recession. I own shares and plan to purchase more incrementally through 2023.
The post Is Now the Right Time to Buy Couche-Tard Stock? appeared first on The Motley Idiot Canada.
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More reading
- For How Iâd Invest $20,000 Today if I Needed to Start From Scratch
- Is Alimentation Couche-Tard Stock a Good Buy in March 2023?
- Got $1,500? You Can Confidently Add These 3 Stocks to Your Portfolio
- 4 Incredibly Protected Canadian Stocks to Buy and Hold for Many years
- These 2 Stocks Are Surging to All-Time Highs, So Are They Still Buys Today?
Idiot contributor Joey Frenette has positions in Alimentation Couche-Tard. The Motley Idiot has positions in and recommends Alimentation Couche-Tard. The Motley Idiot has a disclosure policy.