Alimentation Couche‑Tard (TSX:ATD) has been considered one of Canada’s most dependable compounders for many years, however the inventory faces a special set of questions heading into 2026.
For years, buyers may rely on double‑digit progress pushed by acquisitions, scale, and operational effectivity.
Extra not too long ago, that tempo has slowed, and the corporate’s makes an attempt to purchase 7‑Eleven raised issues about how a lot runway stays for mega‑offers.
Concurrently, volatility associated to gasoline demand and the rise of electrical automobiles (EVs) has raised new issues amongst buyers. These shifts have led some buyers to query whether or not Couche‑Tard nonetheless deserves its “ceaselessly inventory” fame.
With that in thoughts, it’s value taking a more in-depth look to reply that query.
Meet Couche-Tard
Couche‑Tard operates greater than 17,000 shops throughout 29 nations beneath Circle Okay and different banners. The corporate generates its income from gasoline, comfort retail, and a rising foodservice section.
A protracted historical past of disciplined acquisitions and greatest‑in‑class integration has been the spine of its progress technique.
In brief, scale, effectivity, and regular money stream stay central to the enterprise mannequin.
Why buyers are questioning the enterprise
The primary concern is that Couche‑Tard’s progress has slowed from its historic double‑digit tempo to a extra modest tempo. In fact, it’s not an indication of firm weak point, however slightly a shift from that hyper-growth period.
The second difficulty is the failed $47 billion bid for 7‑Eleven, which might have created the world’s largest comfort retailer operator.
Had that deal succeeded, it might have include vital regulatory and governance issues. It will additionally elevate questions in regards to the urge for food amongst regulators for comparable mega-acquisitions. This mirrors different segments of the market the place regulators cooled on mega‑mergers after a wave of huge offers.
Regulators aren’t the one ones with that feeling. Traders stay involved about acquisition fatigue and whether or not the explosive progress of the final decade could be matched.
Lastly, we’ve got gasoline margin volatility. Gasoline stays a serious revenue driver for the corporate, regardless of lengthy‑time period uncertainty round EV adoption. This provides a layer of uncertainty to an in any other case defensive enterprise mannequin.
These issues clarify why that “ceaselessly inventory” label is being re‑examined.
Why it nonetheless seems to be like a ceaselessly inventory
Regardless of these headwinds, there are nonetheless loads of causes to see Couche‑Tard as that long-term ceaselessly inventory.
Its scale benefit is gigantic, giving the corporate unmatched buying energy and operational leverage throughout its international community. Moreover, comfort retail and gasoline stay extremely defensive companies, supported by on a regular basis purchases and important journey wants.
In different phrases, Couche-Tard isn’t a vacation spot in itself. Somewhat, it serves as a necessary cease enroute to that vacation spot. And that cease offers all of the facilities its prospects want.
That results in the corporate’s Foodservice section, which stays an underappreciated progress lever. That is very true following the GetGo acquisition, which added increased‑high quality choices.
Turning to acquisitions, Couche-Tard’s integration observe file is among the many greatest within the business.
The corporate has developed a specific knack for extracting worth from bolt‑on offers and realizing these synergies. It’s additionally shifted towards buybacks, returning extra capital to shareholders following the deserted 7‑Eleven bid.
Lastly, there’s the dividend. Whereas modest, the 1.14% yield comes with regular dividend progress supported by sturdy money stream.
Ultimate take
Couche‑Tard will not be the hyper‑progress machine it as soon as was, however it continues to exhibit the qualities that outline a sturdy compounder.
Its scale, defensiveness, disciplined capital allocation, and constant execution give it endurance even in a altering business.
The subsequent decade will probably look completely different from the final, with slower progress and extra measured enlargement. However for buyers snug with these shifts, Couche‑Tard nonetheless stands out as a robust candidate for a ceaselessly inventory in any well-diversified portfolio.
It stays a enterprise constructed for lengthy‑time period compounding, even when the trail ahead is extra gradual.
