Alimentation Couche-Tard Inc T.ATD

Stockchase Best Ideas

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This month’s Best Stock Ideas...

...collectively come from the Stockchase staff. As a general disclosure, Stockchase writer(s) own the following stocks, though we have presented the bear case too:

Alimentation Couche-Tard ATD-T

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The venerable chain of gas stations and convenience stores will continue to thrive with the elevated price of oil and gas. Oil may not return to the $120 highs for a third time this year, but could very well be rangebound between $80-100. In any case, ATD will benefit. The gasoline attracts customers into the attached convenience stores where drivers buy candy, soft drinks, sandwiches and hot dogs at much-higher margins. However, their formula is being tested in the age of high inflation. On Aug. 31, CEO Brian Hannasch warned that customers are “trading down” on items, though Coca-Cola and Monster Energy remain strong sellers. Also, Hannasch reports “strong double-digit growth” in ATD's private label brands as consumers watch their pennies. 

Despite inflation, ATD enjoyed a 14% increase in net earnings in that quarter, Q1. Shares have since popped $3 to close $59.46 before Labour Day in heavy volumes. It was the third earnings beat in a row at $1.12 actual vs. $0.95 estimated. Shares are close to 52-week highs, but there's a little more gas in the tank, so to speak.