Alimentation Couche-Tard (TSX:ATD) is one of the top Canadian stocks. With a market capitalization of more than $72 billion, it’s the Canadian giant many investors may not have heard of. However, as I’ve pointed out in recent pieces, this gas station and convenience store operator has seen quite remarkable long-term growth. A glance at this company’s chart below essentially says everything any investor will need to know. The double-digit capital appreciation is an attractive value to consider in the coming years.
With such multiple and long-term growth prospects, let us look into where Couche-Tard will stand in the next 5 years.
A unique business model
Alimentation Couche-Tard owns a chain of convenience stores in North America, Scandinavia, Poland, Ireland, Russia and the Baltics. The company generates revenue by selling groceries, tobacco products, fresh food, gasoline, and quick service restaurants.
Over the past 10 years, the company has been one of the top performers on the Toronto Stock Exchange and delivered consistent returns. The convenience retailer’s business expansion in the European region helped it earn higher profits and deliver a higher dividend yield to Canadian investors. Over time, Couche-Tard has grown its core banners into a global presence, expanding into U.S. and European markets at a staggering rate. And while the company’s focus on acquiring other large grocery/convenience store chains (such as 7-11) has been pushed aside by regulators, this is a company with a strong growth profile that has continued to perform well over time via increasing the efficiency of its footprint.
Strong Q1 numbers
This business model has led to strong fundamentals, which were on full display this past quarter. In the company’s fiscal Q1 2025, Couche-Tard reported net earnings attributable to shareholders of US$790.8 million, a notable rise year-over-year. In addition, the company entered into a binding agreement to acquire nine company-owned and operated convenience retail and fuel sites in Ireland under the Texaco brand.
Alimentation Couche-Tard has also entered into a binding agreement to acquire around 270 company-owned and operated convenience fuel and retail sites under the GetGo Cafe + Market brand. This deal carries a purchase price of US$1.6 billion, subject to post-closing adjustments.
Couche-Tard’s stock price has not exactly traded without volatility. Although the company is recession-resistant, the pandemic took a chunk out of it as work-from-home dynamics changed commuters’ behaviour and convenience stores were shuttered for a time.
Exiting the pandemic, Couche-Tard’s fundamentals exploded, as perhaps you may expect. The company is now valued at a market capitalization of roughly CA$ 72.8 billion and carries a beta of 0.9. Hence, the stock can move in a less volatile trend than the overall market, positioning itself for a defensive value/growth play.
Where will Couche-Tard trade over the next five years?
Predicting where any specific stock will trade over the longer term is a difficult task, and that’s certainly the case with Couche-Tard. This company has continued to grow its footprint globally, and I expect this trend to continue. Additionally, as bond yields come down across the globe, I do expect reduced financing costs will provide some juice to the company’s numbers moving forward.
Accordingly, I view the near-term dip in Couche-Tard stock as one that certainly could be worth buying. At a price-earnings multiple of 19 times, Couche-Tard is fairly valued. However, if the company continues to grow earnings at its historical pace and raise its dividend even higher, this is a value stock I think could at least double over the next five years.
