Is Couche-Tard Stock a Buy?

Alimentation Couche-Tard (TSX:ATD) stock looks like a great buy for a TFSA growth portfolio.

| More on:
Pumps await a car for fueling at a gas and diesel station.

Source: Getty Images

Shares of Canadian retail superstar Alimentation Couche-Tard (TSX:ATD) have arguably been one of the best growth stocks for new investors to stash away in a TFSA (Tax-Free Savings Account) for years or even a lifetime. The company has one of the best managers in the convenience retail industry, and though they’ve got a knack for unlocking synergies from deals, it’s important to note that they’re not entirely reliant on mergers and acquisitions (M&A) for growth. Indeed, Couche-Tard may have a reputation as an industry consolidator with a growth-by-acquisition business model.

Recently, the company has been making smart collaborations (like with the recent DavidsTea partnership) to attract more foot traffic. Additionally, competitive prices on its own line of goods at Circle K have helped consumers save amid inflation without sacrificing the convenience factor. Of course, the rise of food delivery platforms also stands to be a driver for convenience store firms as they aim to take the convenience factor to the next level.

Couche-Tard stock: More growth ahead?

Moving ahead, it will be interesting to see what the company plans on doing with its impressive liquidity standing. Undoubtedly, the company tends to pounce on deals when prices are in a good spot or when potential synergies heavily outweigh the price Couche will have to pay.

Following its acquisition of TotalEnergies’s retail assets, which closed a few months ago, the company has plenty of potential to build value out of the blue. Indeed, the firm will be busy the rest of the year as it looks to bring out the best in the newly added retail network. Despite the size of the deal, though, Couche-Tard still has the financial firepower to make a big pivot into the grocery waters.

Remember when the Couche-Tard went after Carrefour a few years ago?

Though the reaction was overwhelmingly negative when Couche-Tard made its intent to buy the grocer public, I still think buying up a grocer could really drive same-store sales across its extensive network through the roof.

Undoubtedly, Couche-Tard already has convenience down. If it can triple down on fresh food and groceries, I would not be shocked if a higher multiple is warranted over the longer term. Though we can only speculate on where Couche-Tard may wish to look for its next major deal, I think it’s just a matter of time before Couche-Tard gets serious about considering a grocery deal. Whether it be Carrefour or a North American grocer, the opportunities are certainly intriguing.

Should Couche-Tard consider acquiring Empire?

Perhaps a hard-hit grocery play like Empire Company (TSX:EMP.A) is worth checking out while it’s in a multi-year funk, down around 26% from its all-time highs hit back in 2022. Undoubtedly, the grocery juggernaut behind Safeway, IGA, FreshCo, and Sobeys would be a challenging takeover target to integrate, but one that could help take earnings growth into overdrive over the next decade.

At writing, Empire boasts a $8.18 billion market cap, making it an incredibly realistic grocery play for a firm like Couche-Tard if it’s serious about making a gigantic move into the grocery market. Though such a move could be riskier, I think that bringing on Empire’s talent could also help Couche-Tard’s management team learn the ropes in the grocery business.

Grocery deal or not, Couche stock is still a great buy for the long run.

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.

More on Investing

woman retiree on computer
Dividend Stocks

Should You Buy Telus Stock at $20?

Down 40% from all-time highs, Telus is a beaten-down TSX dividend stock that trades at a discount to consensus price…

Read more »

top TSX stocks to buy
Dividend Stocks

Here’s Exactly How $15,000 in a TFSA Could Grow Into $200,000

Canadians with sizeable TFSA balances today have utilized the full potential of the investment vehicle.

Read more »

clock time
Investing

Building Generational Wealth: Why Now Is Still the Time to Invest in Canadian Stocks

Here's why Canadian stocks should still be the core of your investment portfolio.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

The 1 Canadian Stock I’d Buy and Hold Forever in a TFSA

Don't get complicated. Consider this Canadian stock as a long-time buy.

Read more »

Man data analyze
Dividend Stocks

A Top-Performing U.S. Stock That Canadian Investors Really Should Own

This top US tech stock is something you cannot miss out on, and there’s another from Canada that you need…

Read more »

how to save money
Dividend Stocks

3 Premium TSX Dividend Stocks Worth Loading Up On

These three premium TSX dividend stocks remain among the best bets for long-term investors seeking stable total returns.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

3 Canadian Dividend Stocks Perfect for Retirees

These three Canadian stocks are ideal for retirees.

Read more »

Retirees sip their morning coffee outside.
Retirement

Here’s Why You Might Want to Claim CPP at 60 

Are you considering claiming CPP at 60 but are worried if the decision is right? Consider these things before deciding…

Read more »