Q: I've held Premium Brands Holdings Corporation (PBH) for eight years with minimal returns. Given its recent challenges, such as weaker Canadian sales and a premium valuation relative to peers, I’m considering switching to Alimentation Couche-Tard (ATD) for better long-term growth potential. ATD seems to offer a more resilient business model, steady earnings growth, and strategic acquisition opportunities, like the potential 7-Eleven deal. What’s your view on the rationale for trading PBH for ATD and the timing? PBH is forecasting stronger growth however rarely materializes... Does ATD’s scale, diversification, and growth trajectory make it a stronger candidate for long-term value creation, or should I hold PBH given its U.S. expansion plans and historical dividend growth? Welcome hearing 5i's insight especially considering PBH's pop today resulting from positive earnings report. Thank you!
5i Research Answer:
PBH's earnings and guidance were good (comments posted). But ATD has created far more shareholder value (+2,190% over 15 years vs +442%). ATD is larger, more diversified and we would consider much safer. ATD is slightly more expensive (2 multiple points). ATD's business is global, and 7/11 would make it more so. We are pleased with PBH's recent progress but would consider ATD a better, safer, overall company.