Shares of convenience store kingpin Alimentation Couche-Tard (TSX:ATD) have been on an incredibly hot run over the past year, with shares now up an impressive 69% over the past two years. Indeed, the rally has been quite smooth, leaving those waiting for a drastic pullback or correction on the sidelines, missing out on the continued gains as a result of the firm’s incredible earnings growth potential.
Indeed, the stock market rally has seen a great deal of multiple expansion, especially with the artificial intelligence-driven technology stocks. And though shares of ATD have endured some multiple expansion (shares are trading for closer to 20 times trailing price to earnings these days) in recent quarters, I still think the stock is looking quite cheap.
Indeed, the ATD stock rally has been more about actual earnings and sales growth than just multiple expansion. Additionally, even more multiple expansion could be on the horizon as investors begin to appreciate the name’s steadiness, stability, and economic resilience.
Looking ahead, I think Couche-Tard shares will continue to be a great buy. With the stock retreating modestly off recent highs, investors seeking some sort of entry point may finally have one.
At the time of writing, the stock is down just shy of 5%. Sure, it’s not a double-digit percentage point pullback, but it’s one that I think is worth getting behind if you’re a new investor looking for exposure to one of the best earnings growers out there.
Couche-Tard shares could continue to rise from here
Though Couche-Tard is coming in hot ahead of its coming quarterly earnings release (scheduled for later this month), I’d argue that the stage may be set for a nice beat. Indeed, the TotalEnergies acquisition closed a while ago. And as the firm continues doing its best to drive additional synergies from the big deal, I think the pace of earnings growth could continue to impress long-term investors and near-term traders alike.
If the retail scene happens to take a dip, dragging down valuations across the scene, Couche-Tard will be able to step forward as it hopes to bag a few bargains as others hit the panic button. Indeed, the company’s contrarian, value-driven nature is a huge reason why the firm has continued to reward shareholders consistently over time through good times and inflationary, macro-plagued climates.
The Foolish bottom line on Couche-Tard
Looking ahead, though, it’s hard not to feel optimistic as the firm looks to take its earnings growth to the next level. The company doesn’t just have the means to grow inorganically through mergers and acquisitions; it can also make moves to improve same-store sales growth.
Couche-Tard’s private label brand has continued to be an intriguing area of margin expansion amid inflation. And going into the post-inflation environment, I don’t expect momentum in the private label to slow anytime soon. Add potential fresh food efforts (the Fresh Food, Fast program) into the equation, and Couche-Tard has all the makings of a winner poised to keep on winning big time for long-term investors.
