Alimentation Couche-Tard (ATD.TO)

16x cash earnings share price a fair price (current share price).
Strong business for the long term investor.
2nd largest convenience store business in world.
Founder owned business.
Strict M&A operators.

Great operator and consolidator in a fragmented industry. Just expanded in Europe, a pretty good acquisition. Power washes are high-margin add-ons. Undemanding multiple of 17x earnings. Compounded earnings growth at 19% over the last 5 years. Keeps moving up and to the right, higher highs and higher lows. Still a buyer.

Good long-term chart, up and to the right. Use weakness to add exposure. Breaking out to new highs is telling you something, that we're in a bull market.

High quality. Global leader. Geographically well diversified. Largest company in Canada by revenue. Very well managed. Very high ROE (well above market average) and fairly strong balance sheet. Fuel represents about 75% of total revenues. Reasonable multiple of 16x earnings. Buy here, and certainly on a pullback.

7,500 stores in North America + 2,000 in Europe. Will add more after buying Total Energies, to extend them into Germany, Belgium and Holland. Smart acquirers while maintaining a healthy balance sheet (but could lower debt more). They just bought 112 location in the U.S. and they can continue to keep buying and growing. 

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.