Alimentation Couche-Tard (Symbol-ATD.B)

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yielder
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Alimentation Couche-Tard (Symbol-ATD.B)

Post by yielder » 04 Mar 2005 10:31

As with MRU.SV.A, the runup in price over the past three months makes this one a hold instead of a buy. At a current multiple of 27, it's more than fairly valued. There's probably some discounting of the future contribution of Circle K occuring.

Disclosure: I own ATD.SV.B

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Post by yielder » 08 Mar 2005 15:17

Anybody looking to take a position or add to a position might want to nibble here. It's barely a buy but it's a great deal cheaper than it was before earnings were announced. Once again an emotional short term reaction produces a buying opportunity.

Mike

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Post by William » 08 Mar 2005 15:18

Any idea why the stock went down today, record earnings, stock split etc etc. I should not complain as I was riding this from 31.35 so I still have room - hopefully !! :( William

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Norbert Schlenker
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Post by Norbert Schlenker » 08 Mar 2005 15:31

Yielder wrote:Anybody looking to take a position or add to a position might want to nibble here. It's barely a buy but it's a great deal cheaper than it was before earnings were announced. Once again an emotional short term reaction produces a buying opportunity.
I'm going to have start paying closer attention. :D

This is a stock that pays no dividend, has a P/E of at least 20, with a P/B of at least 3.5, plus a multiple voting share class just to worry the governance-minded.

And you own this, yielder?
Nothing can protect people who want to buy the Brooklyn Bridge.

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Post by yielder » 08 Mar 2005 15:51

And you own this, yielder?
Div growth stocks start out not paying divs. If a non-div paying company has all of the characteristics I look for in a div paying then I will consider it. I'm stickier about entry and I'm willing to sell if it gets irrationally overpriced. As for PE's and PB's, the story isn't always in the numbers. In this case, it's Circle-K and how it fits the business model.

As for today's price action, the street was expecting .55 and got .45. They've been steadily ratcheting up forecasts since January based on ????. There's nothing in the earnings release to suggest anything different about the company.

There's a conf call that will be available after 4:30 today at 1-877-289-8525 access code: 21115725 followed by the # key. With 13 analysts following the company, there might be some intersting questions.

As for multiple shares, they don't matter much one way or the other. There are lots of companies with sv shares where management thinks it owns the company and does exactly as it pleases.

Mike

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Post by yielder » 09 Mar 2005 11:41

there might be some intersting questions.
There were - UBS, BNS, RBC Cap, Desjardins, CIBC World Mkts, First Associates, National Bank, Fraser Mackenzie, Goldman Sachs. You have to sit through a tedious recap of results from management before Q&A. Jeez, I wish companies wouldn't do that recap. We can read!!!

What I heard convinces me

1) that ATD is on target,
2) that analysts are idiots, and
3) that analysts are lazy.

Re: analysts being idiots, this was a 16 week reporting period not 12. Many of them asked questions that didn't realize that, eg, why has depreciation and amortization jumped so much this quarter? The answer: As we have mentioned, this was a sixteen week reporting period. Response: Whoops.

Re: analysts being lazy, TDW's action notes this morning talk about much higher depreciation costs. Didn't they listen to the conf call?????

I see this kind of thing over and over. To me it's one of the reasons that the small investor can beat the institutional investor over time. Of course, it's only anecdotal and not statistically supported. :twisted:

Mike

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Post by William » 09 Mar 2005 13:12

" that analysts are idiots, and that analysts are lazy"

how true - another one of my picks SOY is down today -despite record profits William

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Post by dakota » 13 Mar 2005 16:15

2) that analysts are idiots, and
3) that analysts are lazy.


Analysts are supposed to ask questions and if they only have x number of questions and they have all been answered, what are they going to do, say nothing and not be noticed for their supposedly intelligence? Hey!

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Post by yielder » 15 Mar 2005 10:31

It's always worth asking questions even if they are dumb (my question about how changes in Circle-K showing up in SG&A. I need to take a refresher in accounting 101. ;) )
Dear Mr Higgs

You are right to assume that a majority of SG&A expenses are rather fixed by nature(ex:salaries,rents,maintenance...etc) and therefore constitute a higher percentage of Total Revenues in the weak part of our business cycle.In Q3 SG&A expenses represented 15.64% of Total Revenues compare to 15.10% in Q2.

The changes we are going to make in the Circle K network will be mostly related to store renovation and therefore capitalised with limited impact on SG&A.

Margins have shrunk in Q3 because of a change in the product mix compare to Q2.In the Fall and Winter months we sell less high margin items such as fresh food,froster or sloche,beer, water...etc.

Hoping the above anwers your questions.

Regards,

Richard Fortin

-----
Nathalie Toupin
Adjointe exécutive aux Finances Corporatives
Alimentation Couche-Tard Inc.
Tél: (450) 662-6632, poste 4608
Télec: (450) 662-6633


-----Original Message-----
From: Mike Higgs [mailto:moongateca@sympatico.ca]
Sent: Wednesday, March 09, 2005 11:59 AM
To: info@couche-tard.qc.ca
Subject: SG&A


M. Fortin,CFO:

I am a small shareholder in Couche-Tard but I am a greatly pleased
one. Congratulations on excellent execution of your business plan
this quarter.

I listened to the conf call and have a question with regard to SG&A
and seasonality.

Is it fair to say that seasonality depressed sales but that SG&A is
more fixed and not as susceptible to seasonality as sales? Is it also
fair to say that the changes you are making in Circle-K will lead to
higher SG&A before being reflected in higher sales? If neither of
these is correct, could you explain why margins have shrunk?

Thank you.

M Higgs
Last edited by yielder on 15 Mar 2005 10:34, edited 1 time in total.

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Post by Shakespeare » 15 Mar 2005 10:32

Remember the 2:1 split takes effect tomorrow.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by yielder » 15 Mar 2005 10:47

And sometimes your questions pay dividends!!! I have deleted email addresses & most of the message since it contains sensitive info. Very nice window into how ATD operates a critical part of its business. :)
----- Original Message -----
From: "*******" <*******@couche-tard.qc.ca>
To: <moongateca@sympatico.ca>
Sent: Tuesday, March 15, 2005 10:36 AM
Subject: TR: JPMorgan: Real Estate and Cash Investments Follow-Up


Fine with me. The call is confirmed today at 11h00 am.

Regards,

-----Message d'origine-----
De : *******@jpmorgan.com [mailto:*******@jpmorgan.com]
Envoye : 14 mars, 2005 12:45
A : *******@couche-tard.qc.ca
Cc : *******@jpmorgan.com; *******@jpmorgan.com;
*******@jpmorgan.com; *******@jpmorgan.com;
*******@jpmorgan.com
Objet : JPMorgan: Real Estate and Cash Investments Follow-Up


Richard,

As we had mentioned in the email sent to you earlier (see below)

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Post by Shakespeare » 15 Mar 2005 10:54

I admit I am somewhat leary about ATD's Circle K venture because of the very poor history of Canadian-owned expansion into US retailing. Although I have a small position, I feel the stock is somewhat speculative.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by Shakespeare » 16 Mar 2005 10:14

Remember the 2:1 split today!
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by scomac » 17 Mar 2005 09:34

I just got back from Arizona yesterday and I have to say that I was impressed with the Circle K outlets that I made use of. The brand is very prominent in the discount gas market in AZ and they're very strong competitors on price. Based on the kind of discounting going on vs. Chevron, Conoco, Exxon, etc. ($.20+/gal. was common), it has to have had an impact on the net margins that ATD.SV.B will derive from this acquisition. That said, the bulk of the profit normally comes from the convenience end anyway and we're not into the hot weather yet, even down south.

I like what I saw and I'm certainly considering jumping in here.

Scott
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830

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Post by Shakespeare » 02 Apr 2005 10:00

“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by Shakespeare » 07 Apr 2005 11:28

Keep on rolling

The key quote:
"We do not believe the company is targeting large-scale acquisitions in the short term. We maintain that with gasoline and cigarettes now representing 70 per cent of consolidated sales, and longer-term trends in these categories implying declining margins, accretive acquisitions will continue to be a critical factor to [Couche-Tard's] long-term growth."
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by dakota » 07 Apr 2005 16:12

Could not access "Keep on rolling"
A fool and his money are lucky to get togethere in the first place

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Post by Shakespeare » 07 Apr 2005 16:17

“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by dakota » 07 Apr 2005 19:51

Works for me :) Was interesting, thanks
A fool and his money are lucky to get togethere in the first place

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Post by Shakespeare » 04 May 2005 20:34

Down to $16.15 today, high volume, almost 423000, somebody got out.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by yielder » 04 May 2005 22:00

high volume
+2 mil shares on 4/26
+5 mil shares on 4/13
+1 mil shares on 4/12

Stock's down 20% since March 1 on no news other than Q3/05 results at the beginning of March. Nice buying opportunity.

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Post by adrian2 » 05 May 2005 09:32

Norbert wrote:This is a stock that pays no dividend, has a P/E of at least 20, with a P/B of at least 3.5, plus a multiple voting share class just to worry the governance-minded.
Yielder wrote:Stock's down 20% since March 1 on no news other than Q3/05 results at the beginning of March. Nice buying opportunity.
I'm with Norbert on this one. The stock is more than double what it was 2 years ago, and >6 times (eyeballing from TDW's chart) what it was 5 years ago. With no dividends to set a floor and a still above average P/E, I'm going to take a pass.

To me, it's a retailer with an earnings yield of less than 6%. That could go up, but could as well go down. Retailing is a tough business.

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Post by yielder » 06 May 2005 21:50

eyeballing
Interesting analytic technique. :lol:

I just had a peak at consensus earnings forecasts. At the beginning of March, the range was 2.08-2.15 and now the range is .97-.98. Note that Q1 actual earnings were .45/share. They really didn't like what they heard in the Q1 conf call.

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Post by Shakespeare » 13 Jul 2005 09:53

“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

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Post by yielder » 13 Jul 2005 20:18

The North American convenience store industry, dominated by mom-and-pop operators, is ripe for consolidation, a trend that would favour the large publicly traded store operators, analysts at Merrill Lynch say.

"With significant scale advantages, economics favour large chain operators in the c-store industry," the analysts said in a report released Tuesday. "With a still high degree of fragmentation, the publicly traded c-stores stand to be beneficiaries of the inevitable consolidation we foresee."

The Merrill team reinstated coverage of industry leader 7-Eleven Inc. (SE-NYSE) with a "neutral" rating and a $30.22 a share (U.S.) price target. It said the neutral rating was based solely on valuation, given that 7-Eleven is already trading at near-peak multiples of its earnings.

Shares of 7-Eleven, the largest North American convenience store chain with 5,800 stores in the United States and Canada, have risen 332 per cent in the last three years and closed yesterday at $31.71.

The brokerage also raised its target on Canadian market leader Alimentation Couche-Tard Inc. (ATD.SV.B-TSX) by $2 (Canadian) to $22.50 and repeated its "buy" rating, noting that the Laval, Que.-based company has proven it can acquire assets and successfully integrate them. (Merrill initiated coverage of Couche-Tard in December, 2004.) Shares of Couche-Tard, the largest convenience store operator in Canada with half the market share and the second biggest independent c-store operator in North America, have risen 121.6 per cent in the last three years and rose 21 cents to $19.21 yesterday on the Toronto Stock Exchange.

"Couche-Tard currently trades at a significant discount to U.S. industry leader 7-Eleven but at a premium to Southeast regional operator The Pantry. We anticipate a narrowing of the gap between 7-Eleven and the other two players over the coming 12 months . . .," the report said.

It noted that the publicly traded convenience store chain has outperformed the S&P 500 composite index and the S&P 500 retail index for the past four years.

In addition, growth in the convenience store industry surpassed that of any other retail segment in 2003 and 2004, the Merrill report said.
Source

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