Opinions
Christine Poole
Alimentation Couche-Tard
ATD-T
DON'T BUY
Jun 27, 2025
Stock price when the opinion was issued
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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%.
At least they're talking now, trying to figure out how they can get regulator approval (the biggest concern). Success would give ATD 80k more stores, a near-monopoly in the US, so some would have to be sold. That's a distraction. Wrestling with a low-income consumer who's having troubles with inflation and trading down, which hurts the bottom line.
For him, it's a "heads you win, tails you win" situation. If successful, ATD can improve operations and pay back acquisition debt quickly. If not, they'll do other deals and buy back a ton of stock. An absolute bargain. Once we get through the issues with the US and NA consumer, this will return to compounding greatness as before.
Owned since his firm's inception. Great example of a compounder. Huge potential acquisition of 7-Eleven, and he'd prefer it not happen. This will cost much more than previous acquisitions, plus the people in Japan really don't want the deal. An acrimonious dance, and that risk is overhanging the stock. He really does not want them to overpay, wants them to stick to their track record of disciplined capital allocation.
ROC over 20 years is consistently in the 20% range. Wonderful, long-term holding. He added again around $69.
There are concerns it might be too diluted if the acquisition goes through. However the acquisition would be accretive and the 7-11 stores could become more profitable, as well as supplying more food for ATD's stores. It is still an uphill battle and if it doesn't go through it would allow ATD to concentrate more on organic growth.
Didn't care for its bid to acquire Seven & I, so they sold. This could be one deal too many; could indeed be game-changing, but not in the way investors hope. They'd have to issue massive equity, take on massive debt, with integration risks.
If it walked away from the deal, he might be interested again.
ATD has a lot of available firepower, and has indicated there are still 'lots' of acquisition opportunities if 7/11 fails. It does get harder to grow as the company gets bigger, but we do not think its M&A run is over yet. We would be comfortable buying this stock if one has a 5-year timeframe. Management has proven itself over and over.
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Seven & I negotiations are a big overhang. If deal goes through, anti-competition reviews will be required. Plus, would likely need to issue equity to fund it. Integration risk. To conserve cash, company's stopped buying back stock until this gets resolved. US operations are seeing softer traffic, with lower-income consumers spending less.
Low-growth area, so they've grown by acquisition. But now that they're so big, there's nothing left for them to buy. Trades at a discount, but lots of uncertainty on the name.