With valuations at eye-watering levels, many value investors may remain content with standing pat on the sidelines, and letting cash accumulate right now. While I do condone such a strategy (having a meaningful amount of dry powder ready to be activated once we see valuations revert toward a longer-term does seem appealing), there continue to be some pockets of value present in today’s market.
One such company I think represents such value is Alimentation Couche-Tard Inc. (TSX:ATD.B). This company operates in a relatively low-tech sector. The company provides one of the largest diversified portfolios of convenience stores and gas stations in the world, and is a growth by acquisition play that has recently come under scrutiny for its acquisition offers it has been making to acquire global growth. The company recently made a massive offer to acquire French retailer Carrefour which did not go over well with investors.
I think this is a company with an excellent long-term growth profile that is being unfairly valued by the market right now. Growth in low-tech sectors is being de-valued to an extent I don’t think makes sense right now.
Couche-Tard has proven it’s a return on invested capital machine over time, and the recent dip this stock has seen presents what I think is an incredible opportunity for value investors seeking growth at a reasonable price today. This is a company with the potential to provide stable long-term growth in the double-digit range, but trades at only 16-times trailing earnings.
Invest wisely, my friends.
