Being successful with stock market investing doesn’t mean having a massive amount available to throw into the market and watching it grow. You can also start small and use a disciplined long-term strategy to grow a modest account into a substantial nest egg for your long-term financial goals. Using the stock market wisely to your advantage, you can even make it a part of your retirement plan for a more comfortable life during your golden years.
A successful long-term strategy involves developing the ability to identify solid investments you can buy and hold for decades. Not every stock trading on the TSX is the same. Plenty of companies across different industries offer a lot of promise but fail to deliver. Suppose you’re starting to invest in the stock market. In that case, it’s better to ignore the noise around high-growth opportunities and focus on setting the foundations of a strong self-directed investment portfolio.
Once you have a solid base to build on, you can start looking into higher-risk investments like growth stocks to leverage upticks without fearing potential losses too much. If you’re going for a hands-free approach, you can invest in index funds for their low risk and decent returns. For someone who wants better control over how their money goes to work in the market, here’s one stock from the consumer staples sector you can consider.
Alimentation Couche-Tard
Alimentation Couche-Tard Inc. (TSX:ATD) is a $66.89 billion market-cap company many people might not know directly, but it’s one that most consumers conduct business with regularly. ATD stock is a Canadian convenience store and gas station company with names like the Couche-Tard chain and the Circle-K chain under its belt that operate throughout Quebec and nationwide, respectively. The company also owns and operates gas stations across Europe and the U.S.
ATD stock is not like other energy companies that also operate gas stations. Alimentation can be an excellent investment for shareholders because it doesn’t offer too much of its earnings to investors through dividends. Instead, the company reinvests a higher percentage of earnings to contribute to its growth. In turn, ATD stock can drive more growth in terms of shareholder value.
This approach lets the company invest in growth without relying too much on a heavy debt load, unlike many other companies. ATD also has a fuel sales business that generates significant revenue, combined with the income from its convenience stores.
Solid business model
One of the most significant problems many Canadian companies face is the trade tensions with the United States. While paused for now, the U.S. has placed high tariffs on Canada. ATD doesn’t export too much oil across the border, which would result in a 10% tariff once enacted. Rather, the company makes money by selling diesel and gasoline sourced mostly within Canada. There is a portion of its sales in the U.S. but not nearly as significant as many other companies in different sectors face.
Foolish takeaway
Apart from broader economic issues, ATD stock has been weak for several months. Part of its weak performance can be attributed to its takeover bid of 7/11, which will amount to roughly $40 billion. Investors did not take the news well, and that has led to a downturn in its share prices.
As of this writing, ATD stock trades for $70.56 per share, reflecting a 17.50% downturn from its 52-week high. The 7-Eleven deal might not pan out due to the Japanese government’s regulatory measures. However, the business itself is strong, relatively tariff-proof, and has a solid presence in the domestic market. The lower share prices make Alimentation Couche-Tard stock potentially undervalued. It can be a good investment to consider if you’re looking for investments to buy and hold for the long run.
