In 2008 and 2009, US convenience store sales grew 3.2% and 4.9% per year, respectively. Even during a deep recession, same-store-sales are resilient at c-stores.
Sales resilience combined with a fragmented base of smaller mom-and-pop stores to acquire has driven Couche-Tard (ATD) to ~20%+ EPS CAGR for decades.
ATD’s investment thesis is built around market consolidation as smaller players are pressured by higher cost and regulation. Consolidation will drive higher fuel margins to rational players, even in the face of declining market volumes due to growth in electric vehicles. The free cash flow generated whilst EV penetration increases can be used to repurpose stores and buyback stock. In short, it’s squeezing FCF from a steadily declining asset in a favourable market structure.