Couche-Tard is a convenience retailer that really gets no respect from investors. The company has some stellar stewards running the show, and they know how to drive synergies from acquisitions like few others in the industry. The company literally has a world of growth opportunities, as it looks to consolidate the still-fragmented global convenience store market.
As we move deeper into the 2020s, tech and convenience will be key to success. Couche ought to get top marks in both categories, thanks to its retail innovation lab at McGill University and its presence in the Norwegian market, where EVs (electric vehicles) are already wildly popular.
With more than enough liquidity to make a big splash in the convenience store or grocery space, I’d look to accumulate shares today while investors have given up on the name. They just don’t understand Couche’s growth story, which, I believe, has never looked better. Couche is well on its way to doubling net income in five years, even though the TSX stock price suggests Couche’s glory days are all but over.
At 15.1 times trailing earnings, Couche is a steal — plain and simple.
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Sticking with the theme of Quebec-based companies, we have Quebecor, a telecom firm behind the Vidéotron banner. Unless you’ve been to Quebec or another Francophone community that the firm serves, you’ve probably never heard of Vidéotron or its parent company Quebecor.
In essence, Quebecor is a telecom firm that’s perfectly fine with staying within the confines of Quebec. While the Big Three telecoms try to take over numerous provinces, Quebecor is fine with growing its service in a market where it has an edge. While telecom services are commoditized, I believe Quebecor is making the most of the French language barrier. Exceptional customer service in French and a slew of terrific French programming will be tough for the Big Three carriers to match.
As Quebecor rolls out the next generation of telecom tech, it’ll likely do so with a higher ROIC than the Big Three players who may be at risk of network overlap. Quebec is a massive province, and Quebecor has deep penetration to remote locations that would be tough for competitors to expand into.
With double-digit ROICs likely and 5G tailwinds, Quebecor is one of my favourite Canadian telecom stocks. Investors should scoop up the 3.4% yield, as the TSX stock looks to correct.
Tucows is a weird one for many reasons, and it’s not just the name of the company. It’s an internet service company with a growthy telecom segment tacked on — two very different industries, creating a unique mix for investors. Tucows is probably best known for its domain name business, which has been pretty unsexy for many years.
The TSX stock has been a roller-coaster ride, and it’s pretty much stuck in a multi-year channel of consolidation. While IT services may not be an attractive growth driver, the Tucows thesis becomes more intriguing when you look at domains as a utility-like business with robust cash flows to feed the growthier telecom business.
Like Quebecor, Tucows’s telecom business Ting isn’t trying to take over the world. It’s not about to spread itself too thin, as some of the U.S. carriers may be at risk of doing. Ting is carving out a niche for itself in very specific localities, and it’s forming a moat around them.
Today, Tucows is fresh off a 20% drop and is worth nibbling on for value investors looking for big, long-term gains.
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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. Tom Gardner owns shares of Tucows. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC, Tucows, and TUCOWS INC.