Alimentation Couche-Tard (TSX: ATD) stock has dropped 6.8% from its 52-week high, set on February 23. On that date, the stock traded at $85.26. At the time of this writing, it traded for just $79.34. That was a curious decline for a (de-facto) energy company in that period. The 2026 market has lifted most energy stocks, as rising oil and gasoline prices have made gas stations more profitable. It’s odd, therefore, that Alimentation Couche-Tard has not participated in the rally. In this article, I explain why I’d buy Alimentation Couche-Tard stock following its late first quarter sell-off.
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Why Alimentation Couche-Tard’s sell-off looks peculiar
Oil stocks have been, for the most part, rallying since February 28. On that date, the U.S. and Israel invaded Iran, prompting a major global crisis that has also been a massive windfall for energy companies. As part of its retaliation, Iran destroyed Gulf oil refineries and closed the Strait of Hormuz, resulting in a reduction in global oil, natural gas and fertilizer supplies, as well as increases in those commodities’ prices. Energy stocks have predictably rallied on these developments, with the S&P/TSX Energy Index up 36% year to date.
Alimentation Couche-Tard is not an energy company is the classic sense of the term. As a gas station operator, it is classified as a retailer. That being the case, the company nevertheless earns 74% of its revenue and 54% of its gross profit from fuel sales. Gasoline and Diesel have been rising in price, just like the crude oil used to make them. You’d expect Alimentation Couche-Tard to be profiting off the current oil and gas market dynamics, if not to quite the same extent as the average energy company, then to almost the same extent. Instead what we are seeing is ATD stock selling off starting at almost the exact date when energy prices started going ballistic.
Valuation
One possibility for Alimentation Couche-Tard’s sell-off relates to valuation. The stock trades at 20 times earnings, 3.5 times book, and 10 times operating cash flow. Again, this is not inconsistent with TSX energy or retail stocks. Canadian retailers generally trade at about 20 times earnings while energy stocks trade at about 17.5. Suncor Energy, an energy stock I own and which has risen 50% year to date, is at 19.5 times earnings. There is nothing about ATD’s valuation multiples that would predict a pronounced sell-off during an energy bull market.
Performance of the non-energy segment
A final possible explanation for ATD’s poor 6.8% sell-off is its merchandise and service segment. If results in this segment, which account for about 50% of earnings, have been truly catastrophic (let’s say, deeply negative earnings), then high fuel revenues wouldn’t make up for them.
Fortunately, “catastrophic merchandise and sales revenues” is not what’s been observed. In the most recent quarter, ATD’s merchandise and fuel sales revenue increased 8.7%, while the segment margin increased from 0.5% to 2% year over year. This improvement in performance isn’t consistent with the reduction in share price that we’ve seen from ATD since February 23 –particularly since fuel segment revenues look set to explode next quarter. So, overall, I think Alimentation Couche-Tard is probably a decent buy here.
