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Nutrition Couche-Tard (TSX: ATD) Stock (TSX: ATD) did not receive a note that markets were supposed to correct (or crash). ATD shares are up more than 5% Thursday, reversing the general trend, as the S&P 500 plunged into bear market territory (this is a 20% drop from peak to trough). In fact, little shop kingpin is on all cylinders, with a good balance sheet and enough cash flow to weather the current storm that has centered on tech stocks.
At the time of writing, Couche-Tard’s share price is $57 and changes per share, within a percentage point of hitting a new all-time high. With enough cash on hand to take advantage of the opportunities, I would argue that Couche-Tard has the means to maintain the rally beyond the $60 level.
Couche-Tard Mergers and Acquisitions Opportunities That Could Send Stocks Soaring
Currently, Couche-Tard is in the race to acquire Petro Canada terminals and UK-based EB Group. Indeed, the acquisition of Petro Canada would be a great addition to Couche-Tard, which has sufficient margin liquidity to make mergers and acquisitions.
Anyway, investors have found relief with Couche-Tard, which appears to be a process of growth and value. The shares are currently trading at 17.2 times trailing earnings, which isn’t that bad for a company that could double its net income in five years. Indeed, profitable real growth is back in pattern, which is probably why Couche can still run higher from here, even as the broader markets dip.
How about an elephant-sized grocery deal?
Couche-Tard has enough cash and credit to make the biggest acquisition yet. However, the management team is too disciplined to make an acquisition just because it has the financing to do so. Undoubtedly, there are many ways in which Couche-Tard can use its enviable liquidity position. They can seek out smaller deals, or they can make a big whiff at the store or grocery space.
So far, Couche-Tard has struggled to pull the trigger on mega deals. The pursuit of French grocery chain Carrefour was halted earlier last year, as was the massive Caltex Australia store deal. It is worth noting that the grocery acquisition was highly admired by investors. Although Couche-Tard could use a grocery store’s supply chain to roll out fresh foods, investors were not impressed, given the potential impact of margin erosion that could accompany such a grocery acquisition.
These days, Couche-Tard seems more willing to stay within its purview within the convenience store arena. There are many deals on the global stage that can help a company achieve its long-term profitability goals. And with a potential slack in the cards, Couche-Tard likely has more chances to pay two quarters for a dollar, so to speak.
Couche-Tard Stock’s Final Outcome
Couche-Tard stock looks ready to move higher, leaving the rest of the TSX index in the dust. With a cheap multiplier and a promising growth plan, I think the consumer staple is worth hiding in as markets continue to turn.