Shares of Alimentation Couche-Tard (TSX: ATD) are having a hot start to the year after spending much of 2025 doing next to nothing. After another strong weekly surge, ATD stock is now up 11% year to date. Amid this tremendous upward spike, investors may be wondering if the strong first month and a half is a sign of what’s to come for the rest of the year as the new CEO, Alex Miller, looks to get some more deals done, provided the right opportunities land in the company’s pitch zone.
While Couche-Tard stock’s surge came suddenly, I still think it’s not too late to get back aboard, especially as investors come to respect the company’s predictable, low-tech growth strategy. Undoubtedly, mergers and acquisitions (M&A) are a massive growth lever that the firm can pull at anytime. However, in recent years, the firm has shown it doesn’t need to lean too hard on acquisitions to drive impressive growth.
With impressive same-store sales growth numbers and the ability to innovate, just like some of its convenience retail peers in the U.S., many of which have drawn in customers, not for the convenience, but for the quality of food. As the future of convenience stores becomes more like a restaurant, with pick-up options for a few grocery items on the go, I think there’s an opportunity for serious growth.
Source: Getty Images
Food has been a focus: It’s hitting the spot
What makes Couche-Tard such an interesting name is that it’s already spotted where the puck is heading next in convenience retail. And with such a strong balance sheet, especially after not acquiring 7-Eleven’s parent firm, 7 & i Holdings, I believe the company can easily buy the right talent to make its deeper dive into hot food even more fruitful.
Arguably, the company has already done a great job of enhancing its food offerings (the Guy Fieri partnership has taken Circle K to Flavortown) without having to acquire a grocery or restaurant chain.
The big question, I believe, is how much more restaurant-like the food offerings can become over time, perhaps after it makes a few more deals in the space. Whether we’re talking about a menu of ready-to-order food items (think pizzas or submarines), there are so many directions Couche-Tard can head in food. And that’s what makes the name so interesting.
Plenty of room to invest in growth
As ATD stock nears its breakout moment, though, questions linger about where M&A could take the firm next. Couche-Tard has the money to spend, and I do think it will be selective in where it chooses to deploy its dry powder. For now, analysts see the potential for “bolt-on” deals to help bolster the presence in Europe.
Personally, I think acquiring somewhat larger convenience retailers (maybe Sheetz, which has a focus on food) in the U.S. could offer greater opportunity for synergies. Also, let’s not rule out a potential wild card that sees Couche-Tard make another bid to get into the grocery business or even the restaurant business. Arguably, both are worth exploring as Couche-Tard readies for the future.
Nowadays, though, the main concern lies in valuations. If the right price can’t be struck, perhaps buybacks, organic growth projects, and smaller deals are the way to go. As the firm invests in its supply chain, I think there’s room for unlocking AI (perhaps robotics-driven) efficiencies in the next five years. Further, “new-to-industry” builds could be the way to expand in an environment where acquisition opportunities are relatively limited at any given time.
