Shares of convenience store juggernaut Alimentation Couche-Tard (TSX:ATD) have been on an explosive run over the past five years, now up just north of 116% over the timespan. All the while, the TSX Index was up a mere 33%, making ATD stock a proven market crusher.
Though past results are not a guarantee of what to expect in the future on the front of returns, I believe that the next five years could be just as impressive, if not more so, as the firm embarks on the next chapter of its growth journey.
With an intriguing five-year plan in place and the means to keep the growth (in the top and bottom line) going strong for the long haul, I think the stock has a realistic chance of continuing to gain for investors. As management continues to learn and adapt, I think there’s a good chance that the next five years could prove just a bit brighter than the last five.
Couche-Tard’s balance sheet could drive acquisitions
As it stands today, the company has a sound balance sheet with enough financial firepower to make a pretty sizeable deal. Of course, don’t count on the company to rush with its next acquisition. If there’s no value to have (often in the form of meaningful synergies), the company is fine looking elsewhere.
While the past few years have been full of smart deals, they haven’t been blockbuster ones — at least not to the magnitude of the failed Carrefour one, which was shot down by the French government rather quickly. Indeed, the Couche-Carrefour deal was going nowhere. However, it gave us a glimpse of what management may have been thinking with regard to their long-term acquisition plan.
Though the fallen-through grocery acquisition is now a distant memory, I still think Couche’s management team is open to another potential grocery deal, provided the price is right.
Couche-Tard: The TSX growth king to own!
The convenience store industry is about to change, perhaps in a big way, as more electric vehicles (EVs) look to charge up. Over the next 10-15 years, more charging stations will look to take the place of fuel pumps. And in Canada, the government is looking to phase out gas-powered cars and trucks by 2035.
Now, that’s quite a ways away. However, is 11 years really so distant? For a long-term investor in Couche-Tard, I’d argue not. The company will need to shift gears (please pardon the pun) to better cater to the EVs on the roads. And there’s no better way to draw a crowd than with delicious food at decent prices.
Fresh food has been a boon for the convenience store scene. And it’s a trend I expect to continue for years to come. Over the next five years, I’d look for Couche-Tard to keep doing its best to boost its fresh food business.
Perhaps the local Circle K will be able to better meet the needs of grocery store shoppers with a more extensive line of offerings. In such a scenario, people may save themselves a rather lengthy trip over to the local grocer. At the end of the day, Couche-Tard is in the business of convenience.
It saves people time. And if it can save trips to the grocery store and a trip to the restaurant (perhaps future Circle K locations will have freshly prepared restaurant-like offerings), all while charging their EVs, I believe Couche-Tard will remain the undisputed king of convenience.
