Shares of Alimentation Couche-Tard (TSX:ATD) have really performed well for investors over the years. The company has found a way to keep driving earnings higher, even in the midst of some pretty considerable (and scary) macro headwinds. Indeed, the management team seems to be best in class at finding value in the merger & acquisition (M&A) scene while exploring new organic ways to drive sales and earnings.
Despite surging 120% over the past five years, I still think ATD stock is a great value play that may actually be able to bolster its blistering pace of growth. Indeed, convenience retail isn’t exactly a hot growth industry. But Couche-Tard has made it one, with its unique business model and superb management.
Sometimes, the management team makes all the difference. And I do believe that Couche-Tard’s bosses deserve all the credit for the stock’s recent performance.
Couche-Tard stock: Defensive growth at a discount?
At writing, shares go for 17.04 times trailing price to earnings (P/E). That’s not at all high for a quality earnings-growth juggernaut you’ll get. Even with recession headwinds beginning to close in on the economy, ATD stock looks like a bargain right now.
Could Couche-Tard really be a recession-resilient defensive growth firm? It really comes down to how hard the recession will hit and how long it’ll take before the recovery sets in. Assuming a mild recession that’s short-lived, I do think ATD stock can shrug off macro headwinds and move higher, even without help from the TSX Index.
Indeed, Couche-Tard is a wonderful business that stands out as a winner destined to keep on winning!
As recession hits, Couche-Tard may be able to get more bang for its buck once it’s ready to make more large deals again. Sure, the company has been wheeling in dealing in recent years. But it has not exhausted its cash load. And that’s only wise, given markets can move in mysterious ways.
With a nose for value and synergies, I believe Couche-Tard is one of the stocks you can simply stash in a Tax-Free Savings Account for years at a time.
A grocery deal could ready Couche-Tard stock for growth in the EV age
As more electric vehicles (EVs) hit the roads, one has to wonder what the fate of fuel sales will be. Undoubtedly, fuel sales will fall under more pressure as more EVs drive on roads. Fortunately, Couche-Tard is already focused on the EV world, one that could entail sales growth in spite of falling fuel sales.
I think a grocery deal could be a game-changer for Couche-Tard. The company tried to acquire Carrefour, but the deal fell through so fast thanks to the French government. These days, grocer valuations haven’t been incredibly attractive. Still, I think Couche-Tard could use a grocery supply chain to take its fresh food business to the next level.
Couche-Tard has hit the spot with fresh food. And as it continues to bolster its fresh and hot food offerings, I suspect ATD stock can keep up the earnings-growth pace well into the EV age. Back when Couche-Tard tried to buy a grocer, shares slipped by quite a bit. If Couche-Tard can’t get a good price for a grocer, I suspect shares could be punished again.
In any case, I think Couche could be more successful with a grocery deal if it stayed in North America. There are a lot of grocers that could be even better in the hands of a Couche-Tard.
