1 Growth Stock To Buy and Hold in a Market Downturn

Many investors still see a possible market downturn coming over the next year. Here’s a growth stock that can weather that volatility.

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gas station, car, and 24-hour store

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To say that the market has been volatile in 2023 would be an understatement. Even with the market showing a small gain year-to-date, many still believe that a market downturn is coming sometime within the next year.

That’s reason enough to serve as a reminder to diversify your portfolio. And incredibly, here’s one growth stock to consider for your portfolio that performs well in almost every environment, even during a market turn.

Gas up your car (or charge it)

Alimentation Couche-Tard (TSX:ATD) is a name that should be familiar to most Canadian investors. In case you aren’t familiar with Couche-Tard, the company is one of the largest gas station and convenience store operators on the planet.

Yes, gas stations and convenience stores. These are passive, everyday businesses that we interact with daily. They also provide a necessary service and attract good amounts of traffic, despite not being a destination (more on that in a moment).

In terms of numbers, Couche-Tard has over 14,000 stores in 24 countries across the globe. This makes it a global operation that is well-diversified.

As of the time of writing, the stock is up just over 11% year to date, and 28% over the trailing two years. Over a longer period, that growth really shines. In fact, in the past five years, the stock has surged 120%.

That may be reason enough to consider the stock, but Couche Tard offers much more for investors, including defensive appeal during a market downturn.

Results speak volumes

Couche-Tard last reported results for the fourth quarter of fiscal 2023 earlier this year. In that quarter, the company reported earnings of $670.7 million, or $0.69 per diluted share. By way of comparison, in the same period last year, Couche-Tard reported $477.7 million, or $0.46 per diluted share.

A big catalyst behind that increase was merchandise and service revenue. In the most recent quarter, the segment reported revenues of $4.2 billion, reflecting an increase of 11% over the prior period.

Few investors may realize this, but while Couche-Tard is a growth-focused stock, the company also provides investors a quarterly dividend. As of the time of writing, the yield is a paltry 0.84%, but it is something, and more importantly, it’s growing.

In fact, over the past several years, that dividend has crept up well over 100%.

What about growth?

Couche-Tard is a superb growth stock. Apart from being a $65 billion behemoth with a solid global portfolio, Couche-Tard has taken an aggressive stance on growth.

In just the most recent quarter, Couche-Tard completed the acquisition of 55 convenience and fuel sites in the U.S. Additionally, Couche-Tard added 65 express tunnel car wash sites to its portfolio, which represents a unique expansion strategy.

And that’s not all. Couche-Tard is also in the process of building out an EV charging network in the U.S. The initial 200-site network for North America is expected to be fully online within the next year. This is a significant development that shouldn’t be underestimated.

Here’s why. The EV market is experiencing massive growth. Government policies are providing the incentive for both automakers and consumers to shift to electrification. And that presents a massive opportunity for charging networks like the one that Couche-Tard is building out.

Another key point is charging times. Charging times for EVs are considerably longer than gas-powered vehicles, often taking an hour or more. For Couche-Tard, this means fuel stations and their respective convenience stores can be modified to provide services while customers wait.

This is already the case in markets in Asia, where gas stations aren’t viewed as interim stops, but rather destinations for locals where food and seating is often available.

The fact that Couche-Tard is already working on this transition, and is well-capitalized with an appetite for expansion makes the company an exciting growth prospect. That serves true even during a market downturn.

Will you buy Couche-Tard before a market downturn?

No stock is without some risk, and that includes a defensive gem like Couche-Tard. Fortunately, given the defensive appeal of Couche-Tard, that risk pales in comparison to many other investments.

In my opinion, Couche-Tard is a worthy growth stock to consider for your portfolio, even during a market downturn.

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 Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.

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