Shares of Quebec-based convenience retailer Alimentation Couche-Tard (TSX: ATD) have had a rather uneventful past two years. The stock has gone nowhere over the period, and questions linger about whether the former earnings-growth darling can get back to winning again. Undoubtedly, the firm might have what it takes to make a big merger and acquisition (M&A) splash this year, especially as investors look for a clearer path forward now that Couche-Tard will be moving ahead without the assets of 7 & i Holdings.
While regulatory unknowns and other hurdles might prevent Couche-Tard from making large-scale deals, I think that the company behind Circle K does not need to swing for the fences with its next deal(s) to get its earnings growth going strong again.
Organic growth initiatives (think doubling down on food) can offer the firm a nice jolt. But, at the end of the day, Couche-Tard has the money to spend on deal-making. And if it can put its foot on the organic growth gas while also pursuing opportunities across the convenience store scene, I think that the stock could be in for a nice boost.
Source: Getty Images
Couche-Tard has hit the spot on value offerings
While the two-year chart of shares of ATD might look quite nasty, I think that it’s encouraging that a floor of support has been found in the high-$60 range. With shares up 11% from those lows, perhaps things could be looking up for the retail juggernaut in 2026, as the new CEO, Alex Miller, looks to find acquisition opportunities in key growth markets.
With a strong quarter of results in the books, and a seemingly improving value proposition (consumers have been buying up meal deals offered by the convenience retailer), I think Couche-Tard is poised to win as it scales up and expands its value proposition in food and beyond. In this challenged retail landscape, value wins.
And with a focus on offering low-cost meal deals, it feels like organic growth alone might be able to help shares of ATD climb out of a multi-year rut. Of course, if management gets wheeling and dealing again, shares might be able to really pick up their momentum.
But what about M&A?
Now, the company doesn’t need to make a massive deal, but with plenty of cash on the sidelines, it seems like the firm is keeping its options open. And with management hinting at potential M&A in 2026, I think investors are heavily discounting the stock right here. Perhaps the firm is waiting for the perfect, large-scale acquisition opportunity before pouncing.
Given the regulatory hurdles that a massive convenience store acquisition would entail, though, I think the market would be content if the firm were to just make a slew of smaller deals. Either way, the firm’s focus on offering more value might be the key to impressive results until the firm is finally able to get acquiring again.
Of course, valuations on a broad basket of convenience-store takeover targets have risen over the past year. That makes it a big tougher to loosen the purse strings, especially if synergy opportunities prove limited. Though investors might not like it, I think waiting patiently for lower prices isn’t a bad idea rather than rushing into deals at a time when the price of admission is skewed towards the high side.
