Mr. Market rang in the new year (2024) with quite a brutal plunge. In Canada, the retreat was rather mild, with the index just falling around half a percentage point. With tech stocks leading the downward charge, there’s concern that we could be headed for a repeat of 2022.
Either way, smart investors should consider sticking with value plays that can withstand another mild tech wreck. In this piece, we’ll consider one of the best growth companies lying outside of the technology sector. Indeed, the retailer proves that you don’t need to be on the cutting edge of the latest and greatest innovations to deliver truly phenomenal growth over time.
Couche-Tard stock: A smart long-term investment for 2024
Shares of Alimentation Couche-Tard (TSX:ATD) look quite robust heading into 2024 after a remarkable 2023 that saw the convenience store giant outpace the broader TSX Index by a great deal. The low-tech earnings grower could continue to fare well as the economy is tested while interest rates begin to retreat.
Additionally, Couche-Tard may just be able to put its cash and credit pile to work as the lights begin to dim on the convenience retail industry. Indeed, few firms do “growth by acquisition” better than the likes of the Quebec-based convenience store kingpin.
At around $78 and change per share (just shy of all-time highs), I continue to be a fan of the company, regardless of where the markets head next. The first trading day of 2024 suggests tech could drag down market averages after an impressive year of relief and gains on the back of trends like artificial intelligence.
In any case, Couche-Tard’s slightly lower beta (currently sitting at 0.85) entails less correlation to the rest of the stock market. In 2024, that could be a good thing, given the potential for bumpiness.
Let’s go over three quick points that lead me to believe that ATD stock is a smart buy in 2024 for the next 10 years and beyond.
Couche-Tard’s managers are value oriented
First, Couche-Tard’s management team is the star of the show. They’re very value-oriented and won’t make deals unless they have a pretty good shot at building value for their long-term shareholders. Not only does the management team seek to unearth value, but they’re all about investing for the long haul.
Unlike most other firms that may pursue deals to get a short-term jolt from Mr. Market, it seems like Couche-Tard couldn’t care less about short-term fluctuations. If there’s long-term value to be had, management will get serious about a potential deal. Otherwise, they’re fine sitting on their hands.
Couche-Tard knows how to say, “No!”
The art of any good merger and acquisition (M&A) focused firm is the ability to say no to deals that don’t make sense. If the price isn’t right or if there’s too much risk relative to the price paid, the management team over at Couche-Tard isn’t afraid to walk. Indeed, it’s this discipline that makes Couche-Tard a magnificent company that can treat every M&A announcement as a positive driver in shares.
Indeed, when most firms announce acquisitions, shares tend to sag. And that’s because takeover prices tend to trade at premiums to the market. When it comes to Couche-Tard, though, even a premium to the market may make sense, given the company’s propensity for creating synergies out of deals it makes. In that regard, Couche-Tard is a master of M&A.
Couche-Tard has a world of growth opportunity
Finally, Couche-Tard has a long growth runway. The global convenience store market is fragmented, leaving so many potential deals (and value) opportunities for management to pursue. That means there are ample years of earnings growth potential.
