Stocks for the Road

Core Insights - The podcast discusses three companies in the convenience store and gas station industry: Alimentation Couche-Tard, Casey's General Stores, and Murphy USA, highlighting their unique business strategies and market performance. Alimentation Couche-Tard - Couche-Tard operates nearly 17,000 stores globally, primarily under the Circle K brand, and has successfully integrated over 65 acquisitions since 2004 [4][6] - The company has a market cap of approximately CAD 72 billion and continues to pursue growth through acquisitions despite recent setbacks [6][7] - Couche-Tard made a CAD 42 billion offer for Seven & i Holdings, the parent company of 7-Eleven, but faces challenges due to regulatory concerns and the need for a higher offer [7][8] - The company’s sales growth has been uneven, largely due to volatile fuel prices, but it maintains steady profitability metrics with gross margins around 17-18% and operating margins of 5-6% [8][9] - Nicotine products account for nearly 40% of merchandise sales, and shifting consumer preferences towards healthier options and electric vehicles may impact future sales [9][10] Casey's General Stores - Casey's focuses on underserved areas, with 72% of its stores located in communities with fewer than 20,000 people, which is seen as a strategic advantage [16][17] - The company has outperformed the S&P 500 over the past decade, with a five-year operating profit growth of nearly 17% [19][20] - Casey's has a gross margin of close to 60% on food sales, while fuel margins are around 10%, indicating a strong focus on in-store sales [21] - The company trades at approximately 28 times earnings, and valuation metrics are at the high end of their historical range, suggesting a cautious approach to investment [22] Murphy USA - Murphy USA has seen significant stock performance, with an increase of over 820% in the past decade, and is known for its aggressive stock buyback strategy [23] - The company emphasizes strong capital allocation, focusing on share buybacks, dividends, and strategic acquisitions [24][25] - Murphy USA targets underserved communities, similar to Casey's, and aims to serve a customer base that is increasingly living paycheck to paycheck [26][27]