Couche-Tard (TSX:ATD) has touched new all-time highs in recent weeks. As the high-momentum play looks to keep the good times going, I’d look to take advantage of any near-term pullbacks to add to a position. Even if a dip doesn’t happen, I’m certainly not against nibbling at these levels, as I believe the rally is more than sustainable.
The convenience store consolidator continues to find ways to impress Bay Street. With strong (and seemingly improving) fundamentals, I view Couche as an earnings-growth gem of a company that may also be in for multiple expansion, as more investors grow to appreciate predictable cash flows.
Investing in the era of cutting-edge tech
With artificial intelligence (AI), electric vehicles (EVs), and other technologies threatening to disrupt a wide range of industries, it’s only wise to be alert to any potential changes in investment theses.
A lot of firms could be at risk of being caught offside, as AI and similar technologies continue to get more powerful. In just a short period of time, economic moats could wither, and competitive advantages could fade. That’s why it’s so important to continue to put in the analysis well after you hit the buy button.
Couche-Tard doesn’t stand out as a firm that will lose as new tech trends take hold. If anything, Couche may be able to operate more effectively in a new era.
Couche-Tard is a firm that operates in the ever-evolving convenience store and gas station business. Undoubtedly, the rise of EVs could disturb the gas station-focused convenience retail landscape by a bit over the next five to 10 years. I’m not worried, though.
Why? Couche-Tard is aware of the change on the horizon, and it’s ready to change itself. Only time will tell how charging stations over fuel pumps will change business. However, I think the firm could still do well as it beefs up its merchandise offerings.
Gas sales are a key part of the Couche-Tard story today. That said, fuel isn’t the highest-margin item on the menu. As EV users charge their vehicles at the local Circle K, Couche-Tard will need to entertain guests for a longer duration. The more time people spend at the convenience store, the likelier they’ll be to buy more items or have a hot meal.
You never know how your investment thesis can change at the hands of a new technology. All of a sudden, a wonderful, wide-moat firm could be at risk of losing considerable market share to new entrants or behemoths leveraging new technology to take the lunch of smaller rivals.
If AI innovation continues at this pace, there is bound to be major disruption. As an investor, it’s your job to ensure that your holdings aren’t at risk of losing ground at the hands of unpredictable nascent technology.
As EVs and AI become more commonplace, companies will need to adapt or be left behind. Couche-Tard is one of the companies that’s more than able to pivot effectively. Personally, I think the company is that much more interesting in the EV age. At the end of the day, Couche-Tard isn’t just a gas retailer, it’s a convenience retailer. Gas is a big seller, but it’s just one of the offerings the firm sells.