CASY
🍕 Casey’s is the third-largest convenience store chain and the fifth-largest pizza chain in the United States, primarily located in small towns and rural areas.
🛒 The company operates in ‘food deserts,’ where access to supermarkets and fresh food is limited, making it a crucial resource for local communities.
⛽ 75% of Casey’s profits come from non-fuel sales, highlighting its strength as a convenience store and food provider.
📈 The company has significant growth potential through organic expansion and acquisitions, leveraging its underutilized distribution centers.
@emeritoquintana:
“And the last one I wanted to talk about, Casey’s General Stores, which has gone up, but I think it’s still undervalued. This one is very curious because it is the third-largest convenience store chain in the United States and the fifth-largest pizza chain in the United States. In the United States, there are ads that go to Casey’s for breakfast pizza. Most of their stores are also in small towns and in rural areas and in areas that are called food deserts in the United States. We can already talk about what it is, it is a very resilient industry. In fact, from 2008 to 2009, profit before taxes grew. In 2021, it also grew during the pandemic because it was the only thing that could be open. But it is very fragmented, this chain is consolidating, it is very large, and it only has 2.5% of the total. Why? Because this has historically been from oil companies that had their gas stations and that the store was like an extra service, but that they were not interested in. And from gas stations, they earn less and less, what they want is to focus on their own thing, on exploring, on looking for oil, on refining oil, they don’t want gas stations, they are selling them. Or they have historically been small family businesses that are already in the third generation and that are seeing how their costs increase a lot, regulatory costs for having the tanks there because people don’t want a gas station nearby, and that’s why almost no new licenses are given, plus labor costs. For a small family or that has two or three gas stations, with these stores, the increase in the minimum wage affects them, but a large chain can absorb it or cannot afford software solutions, for example, so that you can order the pizza to have it freshly made on the way to work. In the United States, time is highly valued, but if you do it and you have 500 or 100 stores, well, you take better advantage of it, you have economies of scale, and they don’t. So you can buy them cheap. They are also suffering because there are fewer and fewer sales of tobacco and gasoline itself. But well, a large chain is different because you sell with assistance, it’s like Starbucks or McDonald’s, you know what to expect once you know it. And they are in the interior of the United States, there are people from California who don’t know what a Casey’s is and people from New York who don’t either, but in the interior, yes. And once you know it, well, you trust, and there is more loyalty, more recurrence, it is a place that is cleaner, safer, especially at night if you go alone, if you go with your family, with own brands, with own products. And 75% of the traffic has nothing to do with gasoline. Because many people who are there do not have a car and live more than 15 km away from a supermarket. So they don’t even have places where they can buy healthy food. And besides, 75% of the profits do not come from gasoline. That’s what I like, there are like captive customers, and I already say that permits for new gas stations are not given. And they own the properties, they don’t franchise, and they want to be fully integrated, and they have distribution centers where they have all the trucks, and they want to do everything. And in the end, what they sell is time and convenience. The CEO says that his motto is, ‘Don’t make a convenience store inconvenient.’ They are doing it better and better so that you get something fast and get a good proposition for your money. But they sell prepared food, cooked, not in all parts can you set up a kitchen, for space and for money. So it’s a curious thing, those from Couche-Tard wanted to buy it, and they said no. And it is a very, very interesting chain. They also have three large distribution centers, and these are the Casey’s that exist now in the interior of the United States, and they are underutilized. 75% of the small towns within the margin of action of the sub-distribution centers do not have a Casey’s. So there is room for growth. You can grow organically, you can grow inorganically by buying very cheap from families or from oil companies. And as the distribution centers are underutilized, well, you can estimate that the margins will improve. So it’s a simple thing that is difficult to change with technology and that I like.”
Watch the exact part of the video where Emerito Quintana talks about Casey’s here:
View the video on YouTube.
Read more articles featuring the most recent analysis of Casey’s General Stores (CASY) at this link: CASY stock.
