1 Growth Stock Down 13% to Buy Right Now

Alimentation Couche-Tard (TSX:ATD) stock looks like a dirt-cheap growth play with hidden AI potential.

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As the TSX Index kicks into high gear, investors should be careful to pay only a reasonable price of admission. Indeed, it’s easy to get drawn into paying a nosebleed-level kind of multiple for firms standing behind the world’s hottest emerging technologies. Whether it be generative artificial intelligence (AI), the metaverse (virtual reality, augmented reality, spatial computing and its like), quantum computing, the blockchain, web3, or anything in between, it’s tempting to get some exposure for your growth-focused portfolio, even if you have to pay a hefty price and play the game of greater fools (based on the Greater Fool Theory, which is different from us here at The Motley Fool).

While I believe AI (and perhaps even the metaverse) will eventually emerge into a massive market at some point, I’m just not sure when the biggest gains will flow in. That’s why there’s a degree of risk in overpaying for crowded trades on the market right now.

Instead, I’d much rather focus on the easy-to-understand stocks that have a steady growth trajectory. Sure, shares of such firms won’t go parabolic overnight. But at the very least, they won’t crumble by double-digit percentage points faster than you can react and digest the news that caused such a fall to begin with. Let’s check in with one retail play that has growth written all over it.

Alimentation Couche-Tard: Predictable growth at a reasonable price!

Enter Alimentation Couche-Tard (TSX:ATD), which is down around 13% from its high. The convenience retailer has been growing steadily via acquisitions and smart strategic moves over the past decade and beyond. More recently, though, the firm has demonstrated it doesn’t really need to wheel and deal consistently to push earnings higher.

Though Couche-Tard has relied on its merger and acquisition muscles (management knows value when they see it!) to power earnings growth in the past, it seems like the firm also has the means to drive earnings via same-store sales growth-driving initiatives and improved cost controls.

With the power of AI thrown into the mix, I believe management can take its cost optimization and inventory management to the next level as it looks to bet on organic growth initiatives until it spots deep value in a takeover target. Also, let’s not forget about AI-powered self-checkout, another huge money-saver that also improves the convenience factor.

With the stock in correction territory this May, long-term investors who seek steady results over a long-term timespan may wish to finally start backing up the truck for their Tax-Free Savings Accounts. Over the past five years, the stock has risen more than 85%, not including dividends (the yield sits at 0.94% today, pretty high for Couche standards).

The bottom line

The company is growing rapidly, with an ambitious plan to build around 500 new convenience retail locations by 2028. Undoubtedly, the company is more than just a growth-by-acquisition firm; it knows how to grow organically and prudently.

For now, the valuation of many grocers is a tad on the high side. In any case, I’m sure shareholders are fine with more tuck-in acquisitions in the convenience store scene. For now, Couche-Tard stock is a great long-term bet for investors seeking low-cost growth in a market that seems more than willing to overreach for hyped technologies.

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 Joey Frenette has positions in Alimentation Couche-Tard. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.

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