Alimentation Couche-Tard (TSX:ATD) is a Quebec-based convenience store giant that many Canadian investors may be well aware of. The company operates under the popular Circle K and Couche-Tard brands in North America and is a mainstay for many investor portfolios due to the company's stability and long-term growth rate, exemplified by the stock chart below.
However, it's my view that many global investors may be less aware of the company and its potential to become a major force for compounding over the long term. Here's why I think Couche-Tard Stock is a buy in 2025 and why this is a particular company I remain very bullish on right now.
Strong financial performance and stability
Following the news today that Donald Trump will once again become president of the United States, stocks are certainly having their day in the sun. Couche-Tard stock has surged nearly 3% on this news and is certainly participating in this rally. But other higher-growth stocks are seeing bigger gains, and that's a dynamic that also makes sense.
That said, I think there are reasons to like Couche-Tard Stock following this news. For one, the company has a strong presence in the U.S. market, which has allowed the company to cross the $70 billion mark in revenue with very healthy profit margins. Trading at a price-to-earnings ratio under 20 times, this is also a stock that's relatively fairly valued. I'd actually put Couche-Tard on my list of undervalued stocks relative to its growth rate, and that's a key fundamental reason why I like this company here.
Couche-Tard thrives on high-frequency and low-cost purchases, meaning its business model resists economic downturns. Demand for the essentials and fuel remains relatively stable despite inflationary pressures, yielding strong cash flows and revenues. Alimentation Couche-Tard is well-positioned in the market since consumers will continue to opt for convenience during economic times.
Acquiring its way to growth
The other key reason I like Couche-Tard Stock right now is the company's overarching strategic business model. Couche-Tard has consolidated the very fragmented gas station and convenience store market for years. This has allowed the company to continue to earn much higher return-on-equity and return-on-invested-capital metrics than many of its peers as the company improves the underlying fundamentals of the location it acquires.
So long as Couche-Tard is able to continue with this model and its deal flow picks up, this is a stock I think could be poised for some nice gains over the long term. Overall, at its current valuation and with its underlying growth, there are few better Canadian stocks in the market right now. I view Couche-Tard Stock as a strong buy in 2025 for these reasons and a number of others.
