Alimentation Couche-Tard (ATD.TO)

Great company. After 7-11, ATD is the biggest convenience store operator in the world. They paused M&A activity for 3-4 years, but made one earlier this year. Will do very well going forward.

Has owned this for years. They just bought a European company and one in the U.S. They grow by buying and execute well. Debt rose but they will manage that. Good that they're growing through Europe. They've built Circle K well. Can use supply chain management to reduce costs. Buy on any pullback.

vs. PKI

They're different, because ATD is retail and convenience stores, whereas PKI that's only half their business, as well as selling energy products to companies and their BC refinery (25% of their business). Also, different analysts cover each company. The refineries tend to get a lower PE and are less ESG-friendly, and are in a heavier-asset industry. Is less stable than ATD. ATD also has Circle K's not necessarily attached to their gas stations, whereas they are attached under PKI. PKI's balance sheet is more leveraged, too. She owns neither company.

Their big thing is their convenience stores, though they've maxxed out their value. The innovate and reposition well and will continue to do so. Selling gas won't go away overnight. Shares are too high now, though.

ATD has more growth prospects. Total acquisition is really important, as it gives them more geographical diversification in Europe, and they get more stores. Acquisition was at a good price. Debt to EBITDA has gone up, but this is typical and will come down. Great job of buying businesses and integrating.

BCE has a 6.4% dividend yield. Reported decent numbers, except media division was hurt by advertising. Own it for a nice dividend yield that will slowly grow. 

ATD gets the nod, but he owns both.

Both are timely, great secular growers. If he really had to choose, he'd pick ATD because of the more attractive valuation of 15-16x. DOL is at a mid-high 20s multiple, but it's justifiable because it has a faster organic growth rate. ATD has a more under-levered balance sheet, a capable serial acquirer. ATD announced significant transaction last week, increases presence in Europe. Good deal, high single-digit accretion, manageable financially, more to come.

One of his larger holdings. Very astute purchasers. Recent purchase of 2400 stores and car washes will really add to retail capability down the road. In a good position to roll out EV charging in their network. Not sure if he'd add today, but any price rollback would be an opportunity.

Excellent question. It's a ways in the future. Canada will stop selling internal combustion by 2035, but the vehicles will be around well into the 2040s. EVs are not going to put ATD out of business anytime in the investible future. Lots of runway left, same as for energy companies.

(A Top Pick Feb 01/22, Up 18%) It is turning into a global company and is using Hong Kong as a base for expanding into Asia. Has a $62 billion market cap, with a small yield. It is able to deploy $15 billion dollars to make acquisitions without adding much more debt.