Better Buy in February 2024: Constellation Software Stock vs. Couche-Tard Stock

Let’s dive into whether Constellation Software (TSX:CSU) or Alimentation Couche-Tard (TSX:ATD) are the better buy in February.

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The Canadian stock market started with a bang in 2024, as a lot of growth stocks are reaching new highs. As a Canadian investor, you can invest in the tech and energy sector this year to generate greater returns. 

Keep reading to know about the two Canadian giants where you can invest according to your financial and investment goals, and which may be the better buy of February 2024.

Constellation Software

For those seeking a prominent Canadian tech stock in this current market, Constellation Software (TSX:CSU) should be atop most investors’ watch lists. This company focuses on developing and customizing software for private and public sector makers. Constellation operates in various markets, including credit unions, tour operators, communications, beverage distribution, and apparel. 

This company’s stock price has been on a tear, and Constellation’s long-term chart pretty much tells investors the story they need to know. Constellation’s stock price is up more than 57% over the past year, impressing investors with its ability to deploy cash to generate high returns. 

Constellation has announced a modification to its annual interest rate for unsecured floating rate debenture, Series 1, to 10% as of 31st March 2024. In addition, the company will report its final quarter financial result for 2023 on March 6. For investors looking for a growth-by-acquisition play in the software world, Constellation remains a top pick of mine. This is a growth stock with a business model poised to continue compounding for years to come. 

Alimentation Couche-Tard

Perhaps one of the most ardent buy recommendations I’ve had in recent years, and a company I still pound the table on, Alimentation Couche-Tard (TSX:ATD) has certainly been on quite a ride. Over the past year, shares of Couche-Tard have risen more than 30%, though I think more upside could still be possible for this name.

Couche-Tard operates a chain of convenience stores operating in North America, Ireland, Scandinavia, Russia, Poland and the Baltics. It primarily generates revenue by selling tobacco products, beverages, fresh food, groceries, car wash services and more. The company also operates more stores under the Circle K banner in Malaysia, Egypt, and China.

Alimentation Couche-Tard reported net earnings for the second quarter of 2023 of $819.2 million, or $0.85 per diluted share. This number shows great improvement over the second quarter, in which the company brought in $810.4 million, or $0.79 per diluted share. These sorts of results have driven significant valuation growth, with a fundamentally sound backdrop for investors to focus on.

For investors seeking a truly global growth stock with excellent fundamentals and an attractive valuation, Couche-Tard ought to remain a top pick. That said, Constellation Software may also be put into such a grouping (though investors have to look at the company’s forward multiple to a much greater degree). In my view, both stocks remain top picks right now, and I’d say Constellation would be a better fit for a high-growth investor, with Couche-Tard’s more defensive business model better suited for a more cautious investor.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

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