Monday, July 19, 2010

Alimentation Couche-Tard Inc.

I first bought this stock (TSX-ATD.B) in January 2004, and I bought some more in 2006 and 2007. My total return to date is 2.9%. All the growth figures are good for this stock except the ones for the stock price. The reason for this is that the P/E ratio used to be quite high (in 2006 it was 27) and now it is quite low (at 11.3 in 2010). This stock has a reporting year ending in April of each year and they have just reported for April 2010.

This is considered to be a dividend paying growth company. The dividend yield on this stock is quite low (the 5 year average is .7%). This is the sort of stock you might want to buy to diversify your portfolio into consumer stocks. The yield is low, but the growth in dividends is not bad 9.7% for the last 4 years. This company just started to pay dividends in 2006. The yield has also been moving up as it started in 2006 at .4% and is now at .8%.

As I have said, this stock’s growth figures are all good except for the stock price growth. We are in a recession and consumer stocks can get hit hard to recessions. This company also reports in US$ and the growth figures are better in US$ and in CDN$. This is because our dollar has risen against the US$ recently.

For example, the growth in revenue per share has risen over the past 5 and 10 years by 12% and 24% per year respectively. The 5 year figures are worse because the revenues did not grow in the financial year ending in April 2010. They are building value for their shareholders as the 5 and 10 year growth in Book Value is 15% and 21% per year, respectively.

The Liquidity Ratio at 1.17 is not bad, as current assets can cover current liabilities. The Asset/Liability ratio is much better at 1.78. I prefer both these ratios to be at least at 1.50. The last thing to mention today is the Return on Equity. The ROE for the financial year ending April 2010 is 18.8% and the 5 year running ROE is 18.1%. Both these ROE figures are good.

Although I do not have that much invested in this company, I am happy with my investment and will continue to hold on to the stock I have. I try to balance my portfolio with dividend paying stocks that have high yields that grow slowly and low yields that grow quickly. Tomorrow, I will look at the ratios pertaining to the stock price and also see what analysts say about this stock.

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. Ownership of this company is such that Développements Orano Inc. owns 42% and Metro owns 22%. Its web site is here Alimentation. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

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