This stock market rally we’ve seen since the start of the pandemic has resulted in elevated valuations and a real disparity between value and growth stocks. While many stocks may look cheap today and apparent value plays, there are a great number of insidious value traps out there investors should be wary of.
In this context, I think one of the best value plays on the TSX today has to be Alimentation Couche-Tard (TSX:ATD.B). The convenience store and gas station operator has some of the best fundamentals right now in terms of growth plays in the Canadian market, in my view. Trading at a rock-bottom multiple of approximately 17-times earnings, the stock market right now is not pricing in the growth potential of this company at all.
The company has continued to acquire and consolidate a fragmented industry, improving its overall margins and return on shareholder equity along the way. This is a company that shows true value today, rather than other stocks that are either overpriced or value traps right now.
With the ability to grow long-term, I am honestly surprised that this stock is trading so cheap, given the quality of earnings growth this company has posted historically and is expected to earn moving forward. This is a true value play in a market filled with faux-value today.
I would highly recommend investors seeking value check this stock out at these levels, and continue to buy the dips on Couche-Tard moving forward.
Invest wisely, my friends.
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