Ankeny, Iowa–based Casey’s is the third-largest convenience store in the U.S., with some 2,500 locations across 17 states. The company focuses on more rural locales, where its top-notch distribution platform provides a competitive edge. Casey’s is also growing—it expects to add 150 stores during the fiscal year ending in April—and that expanding footprint should keep pushing the shares to new highs even as its valuation remains grounded.
“Casey’s is often cited as one of the best-in-class [convenience store] retailers,” says Markus Hansen, a portfolio manager at Vontobel Asset Management and a self-described “happy shareholder” of the stock. “Casey’s has gone from being a smaller player to now leading the way in the industry.”
Pizza is indeed part of its secret sauce. As tobacco sales dwindle in the U.S. and fuel margins remain relatively uniform across the industry, Casey’s prepared foods set it apart. These “inside-store sales” tend to carry higher margins than gasoline, and as the company acquires more independent operators in a fragmented industry—where even the biggest players have only mid-single-digit market share and mom-and-pop shops often eagerly sell as competition intensifies—it can use fresh foods to increase a location’s sales by double digits.
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January 11, 2024 at 01:00PM
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Buy Casey’s General Stores Stock. Pizza Is Just One Part of the Story. - Barron's
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