Norman LevineAlimentation Couche-TardATD.TOHOLDApr 17, 2019

Great quarter, beat by 35% on fuel. Margins were way up, 30% YOY. Same-store sales were also up. Market doesn't like fuel-based results, as it feels they're transitory. Good grower and compounder, good long-term story. He models 14% EPS growth; trading at 25x for quality, good balance sheet, M&A. Still not a bad entry point.

Very good earnings yesterday. One sector that AI is not likely to replace. Expanded into US -- a much more competitive, but larger, market. If you have a better investment idea, take some $$ off the table. 

Growth-by-acquisition story, plus a little bit of organic growth. Assumes more tuck-in acquisitions over time. Exposure to inflation that consumers are paying every day. Share buybacks and dividend growth. Would perform well if we're facing a 1970s-type energy crisis. 

One way to grow would be to expand its geographic footprint. Yield is 1.07%.

Really good at acquiring and integrating. Growing revenues, most recently because fuel prices are higher. Consumers aren't spending more $$ in existing stores. Excellent operators. In general, he's staying away from the consumer (the downside factor in the inflation story).

Hard to see multiple expansion unless there's some kind of catalyst.

Is skeptical of companies that grow by acquisition. Is well-run and is trading at a reasonable PE, but doesn't see significant growth. If you hold an outsized position, definitely trim. This will withstand a market sell-off.

Taking market share from smaller operators. Last quarter saw improving momentum and US same-store sales up. Long track record of disciplined execution and steady earnings growth. Fundamentals 9/10.

Buy the good ones when they're stalling out. Market fears that inflation will hit the consumer at the pumps, and then at the convenience store level. Things look pretty good. High quality. Trying to grow 12-14%, trades at high multiple.

Cheaper than peers. Attractive place for new capital to start building a position.

Has decent, long-term growth. Allocates capital well and buys decent companies. As they grow, it's harder to buy companies. PE looks fine. 

It is one of the largest gas retailers and has done lots of acquisitions. It is all about the margins of gas prices.. People don't fill up their tanks as much with higher prices and will come back more frequently, not just for gas but for all products that the stations sell. It has a low beta.

Restarted share buybacks. Lots of M&A to be had. Growth of 3-5% a year, with a nice tailwind to double-digit earnings growth for a long time. Results starting to improve. Food offerings aren't as good as some US competitors, and it's fixing that. Not exceptionally cheap, but a great long-term investment.

Doing a better job with in-store food service. Above-industry-average fuel margins amidst tepid demand. Undemanding valuation. Unprecedented back-to-back EPS misses, so sets up for easy comparisons. Ample financial firepower to make interesting moves.

The chart's been swinging up and down, between $68-84 for the last couple years. Is slowly working its way up. Is a defensive retailer. Is holdings its own in the high $70s, so he's looking for resistance in the low-$80s, with support at $77. Can't tell how far up it will go.

He has a small position, was somewhat relieved when the 7-Eleven deal in Japan didn't go through. Now has really strong balance sheet. Focused more on organic growth. Still opportunities for M&A, but probably less ambitious than last year. Reasonably priced.

Question of capturing the margin on elevated gas prices, and will it constrain volumes?

Likes it, but didn't like them going after Carrefour or 7-11. The high oil price is a short-term pressure. The valuation is attractive again.

Recent report wasn't bad. Market's concern is that fuel costs will be intolerable and there will be fewer visits, hurting store sales. He doesn't think oil's high enough to have that impact. Guidance for Q3 and Q4 was pretty healthy.

Really good companies tend to be expensive. Not bad value at 24x PE for 15% growth. Less expensive than usual. Good long-term wealth builder to add at these levels.