Alimentation Couche-Tard (TSX:ATD) stock has faced challenges in recent months, showing a consistent downward trend since early 2024. Trading around a $10 range, the stock has recently fallen to the lower end of this channel, currently priced at around $70 per share. While this dip may seem concerning for short-term investors, it presents an attractive entry point for those with a long-term view. The fundamentals suggest that Couche-Tard remains a solid investment, even in the face of short-term volatility.
A history of resilience and growth
Over the past two decades, Couche-Tard has proven its ability to thrive through economic cycles, consistently demonstrating resilient earnings. The global convenience store and roadside fuel retailer has built a robust business model, primarily driven by fuel sales and convenience store merchandise. Despite market fluctuations, Couche-Tard’s earnings have grown steadily, with the company showing impressive resilience even in tough economic conditions.
At a price-to-earnings (P/E) ratio of under 18, the stock now appears reasonably valued after its recent pullback. For long-term investors, this could be an ideal time to accumulate shares of a company with a solid growth trajectory. Couche-Tard’s long-term performance remains attractive, and its ability to grow during various economic conditions only adds to its investment appeal.
A strong dividend-growth story
Another compelling reason to consider Couche-Tard is its impressive dividend growth. The trustworthy Canadian dividend knight has raised its dividend for about 15 consecutive years, with an astounding 25.7% annual growth rate during that period. The recent dividend hike of 11% in November 2024 brings its current yield to 1.1%. This consistent dividend growth speaks to the company’s strong financial discipline and commitment to delivering value to shareholders.
For income-focused investors, Couche-Tard offers a solid dividend stream backed by a sustainable and growing business. With the stock now priced lower, this could be an attractive opportunity to lock in a slightly higher yield while benefiting from potential capital appreciation as the company continues to expand.
Strategic acquisitions and long-term growth potential
Couche-Tard is not only focused on organic growth but also has an eye on strategic acquisitions to fuel further expansion. It is still pursuing a potential acquisition of 7-Eleven’s parent company, Seven & i Holdings Co. Bloomberg reported that Couche-Tard executives, including founder and chairman Alain Bouchard, are in Tokyo to advance discussions this week. This move underscores the company’s ambition to grow beyond its current footprint of approximately 16,800 sites worldwide.
In addition to the 7-Eleven acquisition, Couche-Tard sees a significant opportunity in the fragmented U.S. market, where it could make further strategic acquisitions to expand its reach. This focus on both organic and inorganic growth, coupled with its disciplined financial management, makes Couche-Tard well-positioned for long-term success.
A recession-resilient stock with growth potential
Despite a challenging year for Couche-Tard stock — down over 12% compared to the market’s 15% gain — the company’s 10-year total rate of return of about 12% has outpaced the Canadian stock market’s return of nearly 9%. The recent underperformance may present an excellent opportunity for long-term investors to add shares of this recession-resilient company to their portfolios.
With a volatile market expected in 2025, Couche-Tard’s proven track record and growth prospects make it an attractive stock for those looking to invest for the long haul. For investors willing to look past short-term market movements, 2025 could be the perfect time to build a position in this strong and reliable stock.
