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Premium content from Motley Fool Stock Advisor Canada
We here at Motley Fool Stock Advisor Canada believe investors should own at least 15 stocks. Our yearly list of “Starter Stocks” is our attempt to answer a simple question: “Where do I go first?”
If you’re a new investor, we suggest you pick three Starter Stocks that interest you and use them to help build out a portfolio of at least 15 stocks. And if you’ve been investing for a while and already own some companies, we think these stocks have what it takes to strengthen any portfolio.
You should feel comfortable holding these stocks for the long haul; not only do they have the strength to ride out downturns, but they’re also built for powerful growth.
Stock Advisor Canada “Starter Stock” #1
Alimentation Couche-Tard (TSX: ATD)
Alimentation Couche-Tard (TSX: ATD) is one of the greatest Canadian companies that has ever been, generating outsized long-term returns for its shareholders as the company has grown into a global behemoth in the world of convenience stores.
Every day, millions of people arrive at a Couche-Tard outlet, and given the nature of its offering, customers aren’t there just to browse — you don’t go to a gas station or stand-alone convenience store if you’re not going to buy something! The company operates its convenience store chain under the Circle K, Couche-Tard, Holiday, and Ingo banners, and I suspect at least 98% of people reading this are familiar with at least one of brands.
Annual growth varies depending on acquisitions, but one thing that’s consistent is how well-run and profitable Couche-Tard is. The company’s operating margin has ticked consistently higher as acquired companies are integrated, and this tends to translate to a return on equity in the ~20% range, which is the norm — a dynamic that is not the norm across the business world.
The company is now on the other side of the pursuit of its biggest acquisition ever: the mighty 7-Eleven juggernaut. Though there was plenty of noise about this deal, it eventually died on the vine. And that outcome hasn’t altered our view of the company’s long-term prospects in the least. More acquisitions undoubtedly are out there, and in the meantime, Couche-Tard is voraciously buying back stock with its ample free cash flow.
Yes, Fools, this is a great company, and when it comes to great companies, there’s generally only one right move when it comes to investing: own them.