Alimentation Couche Tard Inc. Soars 3.6%: Here’s Why it’s Time to Buy

Alimentation Couche Tard Inc. (TSX:ATD.B) jumped following a conditional green light on the U.S. antitrust approval to buy CST Brands Inc. (NYSE:CST). Here’s why it’s time to buy shares.

Shares of Alimentation Couche Tard Inc. (TSX:ATD.B) jumped nearly 3.6% today on news that the company won the U.S. antitrust approval to purchase CST Brands Inc. (NYSE:CST). There is one small condition though: Couche Tard must sell about 71 of its stores across eight U.S. states.

This deal is a breath of fresh air for the convenience store operator which has ambitious plans of consolidating the fragmented industry around the globe. I believe the post-announcement rally was warranted, and that Couche Tard could be on a sustained rally to higher levels from here.

CST Brands deal close couldn’t come at a better time

The CST Brands deal is expected to finally close later this month and is expected to be a huge booster of the top-line in the medium- to long-term. The deal really beefs up Couche Tard’s already solid U.S. presence, making the company one of the major Canadian beneficiaries of the strengthening U.S. economy under the Trump administration.

The deal couldn’t have come at a better time. Everyone, including long-time bearish investor Prem Watsa, is bullish on Trump and his ability to give the U.S. economy a much-needed spark, which will give the Canadian economy a nice bump as well.

The bull market has been going strong for quite a while now, and a correction is long overdue, but if Trump can deliver on his promises, it’s possible that this bull market will find new legs and that much-anticipated correction may have been pushed a few years into the future.

The general public are so bullish in the “Trump Bump” that many investors have been dumping their defensive holdings in favour of cyclical names to get the most profit from the upcoming cyclical upswing.

For those that have been dumping Couche Tard, I believe this is a huge mistake, especially considering that the company is set to ride huge tailwinds in the increase of consumer spending that comes with a strengthened U.S. economy.

More consumer spending means people will be more likely to splurge at convenience stores, which will result in a earnings bump and a sustained rally in shares of Couche Tard.

Huge opportunities in the Asian markets

It’s not just the U.S. locations that will act as a tailwind in the coming years. The Asian market is an area which will allow the company to grow at a compound annual growth rate (CAGR) in the double digits. Vietnam, the Philippines, Indonesia, Malaysia, and India are expected to see CAGRs well north of 10%.

These are huge markets that will allow Couche Tard to continue to grow at its impressive rate for many years to come. Although the stock has slowed down, growth certainly has not. Couche Tard is my largest holding, and I will continue to add on any further signs of weakness going forward.

Growth investors looking to grab a fantastic company at a discount to its intrinsic value should strongly consider picking up shares of Couche Tard today before they break out.

Stay smart. Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns shares of Alimentation Couche Tard Inc. Alimentation Couche Tard Inc. is a recommendation of Stock Advisor Canada.

More on Investing

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »