Quebec-based convenience store operator Alimentation Couche-Tard (TSX: ATD.A, ATD.B) continues its consolidation drive with the recent acquisition of Irish convenience store and gas bar chain Topaz.
While I am generally not a fan of growth by acquisition, I must admit I am impressed with what Couche-Tard management has done while it consolidates what it says is an extremely fragmented industry (i.e. local convenience stores). The Company has managed to integrate most if not all of its acquisitions pretty smoothly and maintain financial discipline both in buying and controlling / paying down debt levels once deals are done.
Key to the Company’s strategy when acquiring convenience store networks is implementing best-in-class processes, improved controls, and a greater selection of private label and prepared food offerings…all of which tend to lead to both higher top and bottom lines.
Couche-Tard shares are currently changing hands at more than 30 times TTM earnings, a trailing yield of about 20bps, and have rallied about 30% YTD.
What do you think…do you like Couche-Tard for the (very) long-haul at these levels? I would rather wait for a pullback.