In the eyes of Vishal Shreedhar of National Bank Financial, Couche-Tard has several years of growth ahead of it as it optimizes its network. (Photo: 123RF)

What to do with the titles of Couche-Tard, Industries Lassonde and Farmers Edge? Here are some recommendations from analysts likely to move prices in the near future. Note: the author may have a totally different opinion from that expressed.

Couche-Tard (ATD.A, $ 51.09): another quarter distorted by the pandemic in sight

One month after Investor Day, analysts are already looking to the first quarter results expected on August 31 and the annual meeting on September 1.

The results will once again be distorted by the pandemic depending on the region. While merchandise sales benefited from the fact that convenience stores were deemed essential, motorists, on the other hand, traveled less.

Vishal Shreedhar of National Bank Financial therefore forecasts a 7% drop in earnings to US $ 0.66 per share, three cents above consensus.

Improving gross margins on the sale of merchandise, higher volumes of gasoline sold and share buybacks should offset the expected decline in gasoline margins at the pump in the United States, sums up -he.

The picture will be very scattered as the expected improvement in comparable convenience store sales will increase by just 1% in the United States, compared to 7.7% in the same quarter of 2020, while gasoline volumes are expected to have rebounded by 15%. %.

In contrast, in Canada, the analyst sees a decline of 6% in sales by comparable convenience stores compared to the pandemic jump of 19% a year earlier. On the other hand, gasoline volumes are expected to recover by 15% compared to the drop of 25% a year earlier.

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In Europe, comparable convenience store sales are expected to rise 2.0% from 3.4% a year earlier. On the other hand, the volume of gasoline should rise by 8% compared to the decline of 12.4% a year earlier.

Vishal Shreedhar renews its buy recommendation and increases its target price from $ 53 to $ 54, or 17 times the expected profit in mid-2024. This compares to the $ 55 average of 16 analysts whose targets range from $ 47 to $ 62.

In her view, Couche-Tard has several years of growth ahead of it as it optimizes its network, improves the performance of the merchandise segment and makes other acquisitions.

In the shorter term, car travel continues to increase in the United States in July and even exceeds the level it had in the same month in 2019. In Canada, health restrictions in some provinces slowed travel in April and May, but since the trend is getting better.

The analyst also welcomes the ongoing purchase of the Wilsons Maritime Network in a transaction of 400 to 600 million US dollars. He expects Couche-Tard to resell the marine fuel terminal in Halifax and keep the 79 corporate convenience stores and 147 other Esso-branded convenience stores.

“Although this transaction is minor, it will contribute to the goal of raising operating profit to US $ 6.3 billion in 2023,” writes Vishal Shreedhar who estimates that the acquired network will contribute less than 5% to the achievement of this mark.

He recalls that Couche-Tard has the means to make acquisitions of US $ 20 billion, without its debt exceeding 3.7 times operating profit.

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Industries Lassonde (LAS.A, $ 171.00): a refreshing bargain



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