A growth company that saw parabolic growth in the 2010-2015 time frame, Alimentation Couche-Tard (TSX:ATD.B) is a stock that has essentially treaded water for the better part of the past decade. This is a stock I still view as a growth play due to the acquisition-focused business model of the company’s management team, but is trading well below the valuation multiple I think this stock deserves.
I think a lot of the depressed valuation multiple Couche-Tard holds today is due to a lack of foresight by many investors, and the market in general, on the potential for growth in the gas station and convenience store businesses. Indeed, electric vehicle sales are on the rise, and the switching costs to change from gas pumps to EV charging stations will be high. The valuations being paid right now for traditional gas station acquisitions may be looked at unfavourably in this light.
That said, I think we’re still a decade or two away from seeing the type of growth that many investors expect to see in the EV space. Additionally, I think Couche-Tard has the management team in place to make whatever strategic changes need to be made to retrofit this company accordingly.
Indeed, this is one of the best management teams out there, in my view, and is capable of making whatever investments are needed over the long-run to get growth to levels that investors expect. This is a stock every long-term investor should consider, especially at these valuations.
Invest wisely, my friends.
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