In this battle of Canadian retailers, we’ll stack up two top-tier names in convenience retail icon Alimentation Couche-Tard (TSX:ATD) and grocer Empire Company (TSX:EMP.A). Indeed, the share price trajectories have looked vastly different in recent years, with the former name suffering a correction while the latter surged furiously.
Though there’s no shortage of challenges ahead for the consumer as the macro environment looks to get a tad tougher, with inflation, tariffs, and maybe even a mild recession, I think that the management teams of both retail plays can pave the way for greater gains, even as the rest of industry runs into a bit of a brick wall. At the end of the day, it’s the industry players that can swim forward against the tide that can gain market share and continue to run, even in the least hospitable of macro climates.
But which name is the better bet for the rocky road that is the second half (H2) of 2025? Let’s find out!
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Alimentation Couche-Tard
I’m a massive fan of Couche-Tard at these levels, despite it correcting more than 11% on a year-to-date basis. With the stock hovering around the $70-per-share level, the same level it was nearly two years prior, I’d be willing to start backing up the truck now that the valuation is more modest and the blockbluster acquisition of 7-Eleven’s parent company, 7 & i Holdings, is a tad closer to the finish line.
Of course, the deal hasn’t yet been set in stone, with more details that need to be ironed out before the firm gets the final green light on the largest convenience store acquisition in recent memory. Though many investors feel like it’s been a slog after the initial announcement of Couche-Tard’s pursuit of 7 & i, I think that there’s ample value to be had, especially if a deal finally does get done in the second half of the year.
Indeed, we’ve been waiting a while, and much of the new developments, including earnings, have been overshadowed by any new bits of information relating to whether or not a deal can get done. Right now, Couche-Tard sees a “clear path” to inking that deal following its U.S. store divestment plan (over 2,000 U.S. stores to be divested to hopefully keep regulators happy).
Indeed, this deal has a lot of moving parts, but with the final stretch likely ahead, I’d argue it’s not time to ring the register on shares of ATD. A 7-Eleven deal in hand could send earnings growth through the roof, making today’s 18.8 times trailing price-to-earnings (P/E) ratio seem like an absurd steal.
Empire Company
Empire Company is a grocery chain behind such names as Sobeys and Safeway. The stock has been melting up since bottoming out close to the midpoint of last year. Since those 2024 lows, EMP.A shares are up just over 75%. These are some serious gains for a consumer staple stock. And the melt-up may not be over quite yet as the company continues smashing expectations on the bottom line.
Despite inflation and all the consumer-facing pressures, Empire has found a way forward. And while CEO Michael Medline is due to retire next spring, I think the firm is in some pretty good hands as the baton is passed to the next big leader. With a nice 1.6% dividend yield and a low 18.9 times trailing P/E, EMP.A stock looks like a steady bet to close off a choppy year.
And the better buy is?
Though I see deep value in Empire, I like Couche-Tard a whole lot more at these levels. It’s a growth gem with a potential 7-Eleven catalyst that’s overly discounted.
