One of the most important principles in investing is patience. You don’t need to chase every rally or try to time every correction. The real opportunity is when you find high-quality stocks that you can buy while they’re temporarily undervalued, then hold them and watch your capital compound as they grow over the long haul.
These opportunities happen more often than you think. Market sentiment can change quickly. One bad quarter by a company or some macroeconomic uncertainty, and even the best stocks can temporarily sell off.
But when the underlying business remains strong, those temporary pullbacks are some of the best times to buy. That’s how long-term investors build serious wealth. You don’t react to short-term noise, you stay focused on the fundamentals and the long-term potential.
In addition to seizing the opportunities and ignoring the short-term noise, you also have to be able to identify the highest-quality companies. And some of the best stocks in history have been the ones that grew steadily over time without making headlines every day.
In fact, boring businesses with strong cash flow, disciplined management, and a clear growth strategy are typically some of the most reliable long-term investments you can make.
So, with Alimentation Couche-Tard (TSX:ATD), one of the most reliable growth stocks in the consumer defensive sector, trading nearly 20% off its 52-week high, there’s no question it’s one of the best stocks to buy right now.
Why is Couche-Tard one of the best stocks to buy now?
There are several reasons why Couche-Tard is one of the best stocks to buy right now, but one of the main reasons is the defensive nature of its business and long track record of strong and consistent growth.
It operates a massive network of convenience stores and fuel stations across Canada, the U.S., and Europe, with more than 16,000 locations in over two dozen countries worldwide.
For years, the company has grown by a combination of value-accretive acquisitions and organic growth. It has bought out regional players, streamlined operations, and used its increasing scale to improve margins.
So not only does Couche-Tard operate in an industry that’s considerably recession-resistant, but it’s also demonstrated for years that it’s one of the best growth stocks to buy on the TSX.
In fact, over the last decade, Couche-Tard’s revenue has grown at a compound annual growth rate (CAGR) of 7.8%. Meanwhile, its profitability has increased at an even faster pace. Over that same 10-year stretch, its earnings before interest, taxes, depreciation and amortization (EBITDA) have increased at a CAGR of 12%.
So, it’s not surprising that the stock has increased at a CAGR of 10.5% over the last decade, equating to a total return for investors of 171%.
However, it’s not just the significant returns that make Couche-Tard appealing; it’s the consistent growth it provides over the long haul, showing exactly why it’s one of the best stocks to buy right now.
How cheap is Couche-Tard trading?
Because of Couche-Tard’s quality, it’s a stock that will never trade dirt-cheap. So the fact that it’s trading nearly 20% off its 52-week high, and essentially at the bottom of its 52-week range, makes now the ideal time to buy the defensive growth stock.
In addition to its lower share price, though, the valuation makes it clear Couche-Tard is trading cheaply. Right now, it trades at a forward enterprise value (EV)-to-EBITDA ratio of just 9.6 times. That’s below both its 5- and 10-year average forward EV/EBITDA ratios of 10.5 and 10.8 times, respectively.
Furthermore, Couche-Tard is trading at just 17.2 times forward earnings, which is relatively cheap for a well-established stock in a defensive sector that’s proven it can grow consistently over the long haul.
Therefore, while one of the most reliable growth stocks on the TSX is trading off its highs, it’s undoubtedly one of the best stocks to buy right now.
