Over the long term, some of the best investments that you can make are companies which offer both defensive qualities as well as a ton of growth potential. And right now, considering that the market environment and economy are so uncertain, plus the fact that many stocks are trading at discounts, it’s an opportune time to look for these types of companies, like Alimentation Couche-Tard (TSX:ATD) stock.
Alimentation Couche-Tard may not seem like the most exciting business to invest in. The Quebec-based company is known for owning gas stations and convenience stores all over the world, a great business but a simple one.
However, when you take a deeper dive into Couche-Tard stock and just how well it has expanded its operations and performed over the years, it becomes clear why it’s one of the best Canadian stocks that you can buy and hold for the long term.
Couche-Tard Stock has had an incredible run over the years
For many years now Couche-Tard stock has been growing its business at an exceptional pace. It has expanded its business beyond North America, diversifying its operations geographically, and making value-accretive acquisitions.
Today, the company operates more than 14,000 stores in 24 countries around the world, with much of its growth coming from acquisitions.
However, in recent years the company has also focused on improving its organic growth, too. It has consolidated its brands, bringing stores under a few banners. Further, it has improved its merchandising and added more grab-and-go options while focusing heavily on improving customer loyalty.
All of this has led to impressive performance for Couche-Tard, making it one of the most successful Canadian stocks that you can buy and hold for years.
In fact, over the last 10 years, Couche-Tard stock has earned investors a total return of 580%, which amounts to a compounded annual growth rate (CAGR) of 21.1%. And over the last 20 years, it has earned investors a total return of 5,794%, a CAGR of 22.6%.
For comparison, over the last 20 years, the TSX has grown at a CAGR of 5.3%, and the S&P 500 has grown at a CAGR of 7.7%.
Therefore, if you had invested $1,000 in Couche-Tard stock back in June of 2003, your investment would be worth more than $58,000 today compared to $2,793 if you had invested in the TSX or $4,390.80 if you had invested in the S&P 500.
Any stock that can outpace the TSX and S&P 500 consistently is an excellent investment. But in Couche-Tard stock’s case, it has massively outperformed these indices.
Couche-Tard is an excellent investment in this environment
While we all know that past performance is not indicative of future results, Couche-Tard stock has proven that it can consistently expand its operations and continue to grow the business year in and year out, showing why it’s such an ideal long-term investment.
However, it’s also a stock that’s considerably defensive, making it one of the best investments that you can make in the current investing landscape.
Many of the main items it sells in gas stations and convenience stores are defensive. It, of course, sells discretionary items as well, but in general, items such as gas and products like tobacco typically don’t see much impact in sales from environments like a recession.
In fact, aside from the pandemic, in the last 20 years, the company has only had two years in which its sales didn’t increase year over year. Furthermore, through 2007 and 2008, the last major financial crisis we experienced, its sales increased by 19% and 27%, respectively.
Therefore, given that Couche-Tard is a reliable and defensive investment and has attractive growth potential over the long run, it’s certainly one of the best Canadian stocks that you can buy today and hold with confidence over the long term.
