After a Failed Takeover Bid, Is This Top TSX Stock a Buy?

With over 15,000 stores across several continents, Alimentation Couche-Tard (TSX:ATD.B) is one of the world’s largest operators of convenience stores.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earlier this week, I wrote an article about the proposed takeover of Speedway gas stations and convenience stores by Alimentation Couche-Tard (TSX:ATD.B). Speedway is owned by Marathon Petroleum and comprises more than 3,900 locations.

Couche-Tard was interested in teaming with a partner to take on some of the Speedway gas stations and address potential antitrust concerns. Besides Couche-Tard, rival bids were being considered by Seven & i Holdings and the private equity firm TDR Capital.

Couche-Tard’s bid is rejected

It has now been reported that Couche-Tard’s bid was not accepted.

Instead, 7-Eleven, a subsidiary of Japan’s Seven & i Holdings, signed an all-cash deal to purchase the Speedway gas stations network for $21 billion.

The agreement, which has been approved by the boards of both 7-Eleven and Marathon, will result in after-tax proceeds of approximately $16.5 billion. The money will be used to pay down Marathon’s existing debt.

The deal is expected to close in the first quarter of 2021 and includes a 15-year fuel supply agreement. Marathon, the largest U.S. refiner by volume, noted that the supply agreement amounts to nearly 7.7 billion gallons per year.

Couche-Tard stock is one of best performing on the TSX

Couche-Tard is one of the best-performing stocks on the TSX, with a 10-year CAGR of 30%. Trading at $46.44 as of this writing, shares are up significantly from $30.40, the 52-week low.

One of the reasons to like Couche-Tard stock is its resilience during economic downturns. Despite the effects of the COVID-19 lockdowns, Couche-Tard’s net income nearly doubled in the fourth quarter of 2020.

In the company’s recent fourth-quarter earnings release, Couche-Tard reported net income of US$576.3 million. The income grew from US$289 million in the same quarter a year earlier. Earnings are expected to grow at an annual rate of 6.5% over the next five years.

Couche-Tard is looking to grow its footprint

Couche-Tard’s bid to take over Speedway shows the company is looking for ways to expand its footprint.

With over 15,000 stores across several continents, Couche-Tard is one of the world’s largest operators of convenience stores.

However, with 7-Eleven’s takeover of Speedway, 7-Eleven’s North American holdings will dwarf those of Couche-Tard. The takeover will increase 7-Eleven’s store count to approximately 14,000 locations in the United States and Canada.

Compare that number to Couche-Tard, with close to 7,300 U.S. stores located in 48 states. The stores are primarily operated under the Corner Store, Circle K, and Holiday banners.

In Canada, Couche-Tard operates a network of over 2,100 stores across the country from the Maritimes to Western Canada. These businesses operate primarily under the Couche-Tard, Circle K, and Mac’s brands.

The bottom line

Alimentation Couche-Tard is a great company for long-term investors. The stock has been one of the most reliable stocks on the TSX and has returned approximately 1,300% to shareholders over the past decade.

With the latest earnings release, the company has shown it can thrive during turbulent times. Couche-Tard has proven to approach strategic acquisitions aggressively. And the company ended the quarter in a strong financial position with more than $4.7 billion in liquidity.

Should you invest $1,000 in Agnico-Eagle Mines Limited right now?

Before you buy stock in Agnico-Eagle Mines Limited, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Agnico-Eagle Mines Limited wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,750.10!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/22/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cindy Dye has no position in any of the stocks mentioned. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Top TSX Stocks

senior relaxes in hammock with e-book
Dividend Stocks

Top Canadian Stocks to Buy for Passive Income

Want to generate a juicy passive income that can last for decades? Here are three stocks every investor needs to…

Read more »

analyze data
Stocks for Beginners

Young Investor? 4 Excellent Starter Stocks for Your TFSA

Looking for some excellent starter stocks for your portfolio? Here are four stocks that you will regret not buying in…

Read more »

space ship model takes off
Cannabis Stocks

2 Canadian Stocks With Strong Momentum for 2025

Celestica Inc. (TSX:CLS) stock and Dollarama (TSX:DOL) stock have sustained strong price growth momentum for a long time.  Here’s why…

Read more »

young people stare at smartphones
Top TSX Stocks

BCE: Buy, Sell, or Hold in 2025?

Few stocks provoke as many opposing opinions as BCE (TSX:BCE). Here's a look at whether you should buy, sell, or…

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Top TSX Stocks

Year-End Review: TSX Stocks That Outperformed Expectations in 2024

Celestica is one of two TSX stocks that have handily beat expectations this year and whose stocks are skyrocketing.

Read more »

Top TSX Stocks

A 6 Percent Dividend Yield Today! But Here’s Why I’m Buying This TSX Stock for the Long Term

Want a great stock to buy? You will regret not buying this TSX stock and its decades of growth and…

Read more »

dividend growth for passive income
Dividend Stocks

2 Magnificent TSX Dividend Stock(s) Down 7% to Buy and Hold Forever

Want to own a few magnificent TSX dividend stocks? Here are two that trade at discount levels you will regret…

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Stocks for Beginners

Set Your Portfolio for Success: Canadian Stock Picks for 2025

Looking for some Canadian stock picks for 2025 and beyond? Here are a handful of options to consider buying that…

Read more »