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Eating Like There’s No Tomorrow 3 Reasons to Buy Couche-Tard Stock

Eating Like There’s No Tomorrow 3 Reasons to Buy Couche-Tard Stock

gas station, market, gas pumps

Image source: Getty Images

There are several reasons to consider a promising project retail stock like Nutrition Couch-Tard (TSX:ATD). Each reason has its own unique and comparative weight, and they come into play depending on how you value that stock.

If you are considering it as a standalone investment and considering whether you should buy it, the emphasis may be on a different set of features when you consider it versus another investment.

The three most compelling reasons in both scenarios are:

Alimentation Couche-Tard is a retail giant with approximately 16,800 locations in 29 countries. More than 13,000 of these locations also provide fuel. This classic combination of fuel and retail has been around for decades and may remain so for several more.

This size has been achieved through strategic acquisitions, the most recent of which was the acquisition of 2,175 retail assets in Germany and the Benelux countries. The entire network serves approximately 8.7 million customers daily.

This impressive international presence also opens the door to more opportunities for the company. If it already has a presence in a country and is developing/maintaining its existing consumer base at a healthy level, it is well positioned to expand that chain or make other acquisitions in that region.

a purchase

The company is working on an acquisition that would significantly expand its footprint: Seven & I Holdings, owner of the 7-Eleven chain. A Japanese company that Alimentation has offered to acquire for US$47 billion. There are approximately 13,000 7-Eleven stores in the United States and Canada alone. The parent company has 85,800 stores under different brands worldwide.

If the company completes this acquisition, it is expected to rise a few more steps and become one of the largest retail chains in the world.

Performance history

The underlying company is solid and the stock is at least generally impressive. It’s coming out of someone right now bear market phase and its performance in 2024 has been relatively poor. However, when we look back further, we see that the performance was quite impressive.

The stock is up nearly 85% in the last five years and 286% in the last 10 years. The company also pays dividends, but its yield generally needs to be higher for it to be a significant deciding factor in this investment.

Stupid takeaway

The stock’s performance and underlying business are compelling reasons to buy this stock, but if you’re looking for something more timely, two additional reasons are its discount and valuation.

The stock is currently trading at a 10% discount from its recent peak and has a price-to-earnings ratio of around 20. It’s not undervalued per se, but that valuation is quite attractive given its track record.