From a fundamental standpoint, few companies on the Toronto Stock Exchange (TSX) today display the fundamental strength and long-term value that I see with Alimentation Couche-Tard (TSX:ATD.B).
This is a company many Canadians may not be aware of, due to the fact that the majority of this company’s operations are centred in Quebec. However, it is an excellent company for value investors who are looking for something "investable" in a sea of overvalued low-quality options out there today.
Couche-Tard is in the gas station/retail business, focused on Central and Eastern Canada, but has expanded into the U.S. and other global markets recently. The company has made a series of smart acquisitions, growing both organically with its owned brands, and through targeted acquisitions.
This company has done an excellent job of integrating acquisitions, posting a Return on Equity (ROE) of 22%.
From a fundamental perspective, few companies in the retail space have the income statement and balance sheet of Couche-Tard. The company has a $22-billion market capitalization with a profit of approximately $2.4 billion, meaning investors are getting access to a great company with an impressive growth history and growth potential in the future for around 10 times earnings.
I anticipate to see continued strong growth in global markets, particularly the U.S. market, as Couche-Tard works to grow its market share and take advantage of many of its strong brand characteristics in new markets; for example, Couche-Tard has greatly improved its customer experience and invested in turning its locations into places people want to stop for gas and grab a bite.
Couche-Tard is also undertaking an European Union test pilot in Norway, something I’ll be keeping an eye on in the near-term.
Invest wisely, my friends.
