ALIMENTATION COUCHE-TARD $30.76 - Toronto symbol ATD.B

ALIMENTATION COUCHE-TARD $30.76 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 242.4 million; Market cap: $7.5 billion; Dividend yield: 1.0%) is the largest convenience-store operator in Canada, with over 2,000 outlets. It also has over 3,900 U.S. stores. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. Couche-Tard sells fuel at over 68% of its stores.

In the quarter ended October 9, 2011, Couche-Tard’s earnings per share rose 6.9%, to $0.62 from $0.58 a year earlier (all figures except share price and market cap in U.S. dollars).

Sales rose 24.1%, to $5.2 billion from $4.1 billion. The gains came from higher fuel prices, the stronger Canadian dollar and higher merchandise sales. The company gets 30% of its sales by selling merchandise.

Couche-Tard continues to grow through acquisitions. For example, it recently bought 33 convenience stores in Louisiana from Exxon Mobil (symbol XOM on New York) for an undisclosed amount. Acquisitions add risk, but Couche-Tard does a good job of integrating the companies and assets it buys.

Motorists could cut their fuel consumption in response to higher gasoline prices. That would hurt sales. However, the company is introducing new products with higher profit margins, including new drinks and improved fresh and takeout food.

The stock trades at 13.1 times the $2.32 a share that the company should earn in 2012.

Alimentation Couche-Tard is still a buy.

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