When you’re thinking of defensive stocks to invest in, you’re likely thinking of companies that don’t offer much growth. While they may offer consistency and stability, strong returns are not what you’d come to expect from them. But that isn’t always the case. There’s one stock that has been able to be profitable and achieve a lot of growth, all while being a fairly safe investment overall.
That stock is Alimentation Couche-Tard (TSX:ATD.B). The convenience store operator has had a terrific performance over the past year, strong enough to outperform even tech giant Amazon. Here’s a look at the two stocks over the past 12 months:
AMZN data by YCharts.
It’s a bit surprising sight to see, and part of it is to do with the fact that Amazon, along with other major U.S. stocks, struggled over the latter half of 2018. While Amazon has just about recovered from where it was a year ago, Couche-Tard, however, has continued its ascent.
Now, this is not to suggest that Couche-Tard is a better growth stock than Amazon or that you should sell shares in Amazon. The point of this is to illustrate just how solid of an investment Couche-Tard has been. Amazon is a bit of a benchmark for any growth stock, and Couche-Tard outperforming it by such a wide margin is a pretty impressive feat for a stock that you might not expect to do so well.
After all, no one would be surprised if I was referring to Shopify, which has had monstrous returns over the years. But that’s why Couche-Tard is a special stock. Not only can it provide investors with a lot of stability during a downturn, but it can offer so much more. At a price-to-earnings multiple of just 23, investors aren’t paying a big premium to own a piece of such a well-diversified company that has operations all over the world.
And its stability is clearly illustrated in the stock’s beta of 0.31, which indicates that Couche-Tard has been significantly less volatile than the markets as a whole, which is ideal for investors who may be worried about a looming recession. While its dividend of 0.6% may not attract many growth investors, it’s just another way that the stock can help maximize your returns. In five years, Couche-Tard’s share price has more than doubled, thanks in large part to its aggressive growth strategy in many parts of the world.
The company’s strong and sustainable business model has allowed Couche-Tard to net more than $1 billion in profit in each of the past four years. And not only has net income been stable, but it’s also grown from just $1.2 billion in fiscal 2016 to $1.8 billion this past year.
Couche-Tard is not bigger, better, nor does it have more potential growth than Amazon. But for a company that’s proven to be a rock-solid investment over the years, it can tick off a lot of the check marks for investors who are looking for a quality stock to hold onto for years and years.
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 David Jagielski has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Amazon, Shopify, and Shopify. Couche-Tard and Shopify are recommendations of Stock Advisor Canada.