Larry Berman CFA, CMT, CTA Alimentation Couche-Tard ATD-T TRADE Jan 27, 2025

Really benefited from building out when US majors got out of retail gas operations. Now not a lot more room to grow in the US, so they looked to Japan (and were rebuffed). Good operator, buys and integrates well on M&A. Store traffic weakness with economic slowdown. Better growth stocks that don't rely strictly on M&A.

He has owned it for a long time. There is a lot of overhang on the stock due to the attempt to buy the Seven Eleven chain. Investors wonder what happens next since it didn't go through. It is incredibly well run and rationalizes their acquisitions. It is ahead of the curve in several ways.

Had held in portfolios almost consistently since 2000. Dynamic takeover story. Watershed moment for corporate Japan after 2 lost decades. Current management of Seven & I is underperforming. ATD management really wants this takeover, but they would never overpay. There's a deal to be had, and taking over just the NA assets is a possibility.

Management's been on a charm offensive in Japan. Excellent serial acquirers, financially disciplined. A sensible deal to be had. Constructive outlook doesn't hinge on a deal. Strategy is to lure shoppers in with cheap fuel, then sell merchandise at high margins. Selling alcohol in Ontario has helped same-store sales. Yield is 1.1%.

Almost 20% ROE. Grew earnings 12% compound rate over last decade. Undemanding multiple of 16x PE. Great combo of value and growth.

The Japanese owners of 7-11 have pushed back in this attempted take-over. It's really a global company, a consumer staple in convenience stores with habitual consumers. It's up in the air if the 7-11 deal will close, but if it does, ATD will be #3 in terms of brick-and-mortar sales in North America. A solid company.

He'd consider stepping in again if the Seven & I deal could get done, but that doesn't seem to be the case. Thinks they're pursuing this transaction because growth opportunities have slowed. He owns, and would prefer, DOL and Loblaw in this space.

He doesn't know how the Seven & I scenario will play out. His investment thesis doesn't hinge on them completing the deal. If it goes through, massive win for shareholders, lots of efficiencies to be had. He's in the camp of the deal not going through and, if so, the company will be off to look for something else. 

Massive scale. No one can do what they do. As they've gotten bigger, margin profile has actually expanded. Gushes tons of cash. 17x PE is a very fair price to pay for a well-run business. Yield is 1.1%.

Great business, great management. Expensive. Off his radar unless the price changed a lot. Seven & I deal is great if they can do it. These guys are big, and he likes companies where there's lots of market opportunity ahead.

Stock will go sideways while all the Seven & I talks go on, because this could be a $46B acquisition for a company with market cap of $64B. Sales are fairly flat, and this deal would get the needle moving again. If no deal, it'll be on the hunt for something else.

Well positioned, nice footprint in NA and globally. It all comes down to the Seven & I deal -- last few weeks have seen more positive rumblings of an agreement. His speculative call is that the deal will get done. Company will eventually come through. If the stock can start to form a base here, a positive trendline should start to form (though may not get back to where it was last year).

Japan is "open for business" in this new world we find ourselves in, and that's an advantage for ATD. Yield is 1.07%.