Alimentation Couche-Tard: Compounder with Favorable Growth Outlook

Jean Pierre Verster of Protea Capital Management presented his in-depth thesis on Alimentation Couche-Tard (Canada: ATD.A/B) at Best Ideas 2020.

Thesis summary:

Alimentation Couche-Tard is the leading convenience store operator and fuel retailer in North America, Scandinavia, the Baltic countries, and Ireland. Couche-Tard’s network comprises almost ten thousand convenience stores throughout North America, just under three thousand stores in Europe and also includes ~2,300 licensed stores under the Circle K brand in 16 other countries and territories. The total worldwide network is more than 16,000 stores.

The company has a market cap of US$35 billion and is headquartered in Laval, Quebec, Canada. Founder and executive chairman Alain Bouchard opened his first convenience store in 1980 and aggressively bought up competitors to grow the store network. Discipline and focus have assisted Couche-Tard in maintaining ROCE of ~20% for many years. The stock has been a ten-bagger over the past decade and the growth outlook continues to be favourable, leading Jean Pierre to find value at the recent price (~18x P/E).

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About the instructor:

Jean Pierre Verster is the founder & CEO of Protea Capital Management, an investment management firm based in Johannesburg, South Africa. He commenced his career in 2005 as a financial manager in the insurance services environment and in 2006 he gained experience as an internal auditor in Standard Bank’s retail banking division. He joined Melville Douglas Investment Management in 2007 where he was employed as a portfolio manager, responsible for the discretionary management of individual equity portfolios. He went on to become part of the award-winning team at 36ONE Asset Management from 2010 to 2016 and partnered with Fairtree Asset Management thereafter to launch the Protea range of hedge funds. In 2019, he founded Protea Capital Management as a stand-alone investment management business. Since 2015, Jean Pierre also serves as an independent non-executive director at Capitec Bank, where he is chairman of the audit committee.