Why Alimentation Couche-Tard Looks Dirt Cheap Today
Shares of Canadian gas station and convenience store operator Alimentation Couche-Tard (TSX:ATD.B) look very attractive for conservative long-term investors today. In my view, this is one of the most undervalued growth companies on the TSX, providing investors with excellent long-term total return potential.
Couche-Tard’s growth-by-acquisition business model has been the driver of this excellent long-term performance. However, in recent years, this stock has underperformed other growth plays on the TSX, due in large part to a lack of acquisition activity of late.
In recent months, Couche-Tard announced an acquisition offer for French retailer Carrefour which resulted in a correction in the company’s stock price. Some investors may have balked at the premium paid. Others may have bemoaned the rather large move into retail away from the core competencies of the company in convenience stores and fuel stations.
However, I view the deal as an indication Couche-Tard is looking for a large transformative deal to diversify the company’s operations further. The writing may be on the wall for fuel stations, with the rise in EV options taking hold today. Convenience stores will always do well, but Couche-Tard is a forward-looking company planning for the coming decades. Accordingly, I view this move as prudent and was taken aback by the selloff in this stock in recent weeks.
In conclusion, for investors seeking a high-quality large-cap "growth-at-a-reasonable-price" stock, Couche-Tard has everything one could ever ask for.
Invest wisely, my friends.
