Despite the broader market seeing significant ups and downs, Alimentation Couche-Tard (TSX:ATD) has been one of the most consistent growth stocks trading on the TSX. In the space of the last decade, Alimentation Couche-Tard stock has delivered an impressive 530% in total returns.
That translates into a compounded annual growth rate (CAGR) of an impressive 20% per year. In that same period, the primary benchmark index for the Canadian stock market appreciated by 54.8%. It shows how Couche-Tard stock has outperformed the broader market by a substantial margin.
Alimentation Couche-Tard is not exactly among the most exciting tech or energy businesses. It is actually a $78.53 billion market capitalization operator of convenience stores. While that industry might not seem like it offers a ton of growth, Couche-Tard stock has proven otherwise without a doubt.
A business expanding worldwide
Alimentation Couche-Tard isn’t just a domestic convenience store chain. The company has an impressive track record of growth through a successful mergers and acquisitions (M&A) strategy that has seen it expand its presence in markets worldwide.
Besides the convenience store segment, Couche-Tard also operates gas stations. Both industries are highly defensive. Due to the geographical diversification of over 14,000 locations worldwide, it also contributes to significant growth for the company.
In Canada, Couche-Tard has locations throughout the country and across the border in the U.S., it has locations in 47 out of 50 states. It has also garnered a significant presence in 25 different countries.
The company has never stopped looking for more strategic acquisitions but has recently started focusing on organic growth as well. From improving merchandising in its stores to consolidating its brands, it is enacting several measures to combine organic and M&A growth to grow shareholder value.
Foolish takeaway
The company’s ability to find ways to grow organically while acquiring more defensive assets worldwide has allowed it to achieve such impressive growth. In fact, it looks like it can continue to deliver exceptional growth in the coming years.
Alimentation Couche-Tard operates defensive businesses. It means that the demand for its products and services will remain recession-resistant, allowing the company to generate solid cash flows, regardless of market cycles. This is a crucial factor because it also has a track record of adapting to changes in the economy to keep running a steady ship.
As of this writing, Couche-Tard stock trades for $81.70 per share. The stock has achieved new all-time highs at these share prices, and this comes during a time of broader market volatility and economic uncertainty. This means that the bigger the stock gets, the harder it will be to match its historically exceptional growth rate.
While a slowdown in its growth rate might cause some concern, it might not be a bad thing. Couche-Tard stock also pays its shareholders quarterly distributions at a meagre 0.9% dividend yield.
If the exponential growth of the business slows down significantly, the stock can still drive more growth for its investors by increasing its payouts. In either case, it seems like a good holding to consider for your self-directed portfolio in the long run.
