Alimentation Couche-Tard (ATD-T)

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%.

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.

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.

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.

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.

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.

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.

Pursuit of Seven & i spooked a lot of people, debt needed would've been a lot. If it's not a friendly transaction, they're not going ahead, but would work out well if it did.

In the meantime, they're exceptional capital allocators with good scale in a fragmented industry. Really good growth profile and valuation. Yield is 1.1%.

Challenges globally. Analysts give it a high $80s valuation in 12 months. For risk/reward, would look attractive at $75 or lower. He'd argue it's a range-trader for the next couple of years, not the growth play of past 3-4 years.

Quality company. M&A is really part of the thesis for global growth and expansion. Quite expensive on price to book. He never knows when to buy it unless it gets super-cheap. Market's wondering how it will grow. Confident in management.

Stock price actually incorporates all the news. Stock hit a peak earlier in February; since then, trading right around $78 plus or minus $5. This consolidation could go on for a long time. Before you can ID the next trend, you have to wait for it to break out -- below $73 or above $85. 

You can buy this now for diversification, but it won't be anything exciting. Keep an eye on that lower level. If it dropped below $70, then $60 or below is quite possible. You can discount the news as not important. Stock's been almost a double over the past 2 years.

Very profitable, ~20% ROE. Compounded EPS at 13% over last decade. Lean and efficient operator. Experienced consolidator in a fragmented industry. Closely watching its pursuit of Seven & I, would be synergistic if deal got done at a reasonable price. Pullback is very timely for a great company. Yield is 0.96%.