Alimentation Couche-Tard Inc.

I am reviewing this stock (TSX- ATD.B) today as I received the April 2009 annual report and I have not reviewed it since I received this report. I first bought this stock in January 2004 and bought more in December 2006 and June 2007. I have made a return of 3.5%, including dividends. This is, of course, a lousy return. However, this is a retail stock and we have been in a recession. Because of the great first quarter of July 2009, some analysts have been revising their estimates upward. Some have also been revising their recommendations upwards to a buy.

This is another Canadian stock that reports in US dollars. The strengthening Canadian dollar will also affect this stock’s performance in Canadian currency. The stock has done better in US currency. However, if you look at the growth figures for this stock, they are all good except for the stock price. The last bear market did not seem to affect their stock price or their earnings. However, it is different in this latest bear market, as the stock price has dipped a lot. In this one also, their earnings have dipped. They started to pay dividends after the last bear market, so we do not have a long record concerning dividends. They have kept their dividends level over the past two years.

Turning to the Asset/Liability ratios, I find the A/L Ratio high and it has a long term average over 1.64, where anything at 1.50 and above is good. The liquidity ratio is a bit different. It is often low, but over 1.00. The long term average is just 1.06. This ratio was 1.07 at the last annual report of April 2009. For the last quarter, it was better at 1.15. Here again what you want to see is a ratio of 1.50 and above. A ratio of 1.00 is ok, but leaves little margin of current assets over current liabilities. These ratios will be the same no matter what currency you are dealing with.

This stock is currently not performing well for me, but I expect it to do a lot better in the long term.

Alimentation Couche-Tard is Canada’s leading convenience store retailer under brands such as Couche-Tard, Mac’s, Becker’s, Mike’s Mart and has US brand Circle K. The company has alliances with fast-food chains including M & M Meat Shops, Pizza Pizza , Subway and Irving Oil. They just opened up Circle K brand in Vietnam. They are expanding into the U.S., having bought Johnson Oil, a major gas station and convenience store operator. Its web site is www.couche-tard.com. See my spreadsheet at www.spbrunner.com/stocks/atd.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.