No. of Recommendations: 7
you have discussed ATD.TO in the past and I have been thinking about purchasing some. Its a nice, steady, predictable grower.
I was thinking also of possibly doing some LEAP options on them, but as far as I can tell, Options are not offered on this stock.
You have to buy Canadian options. I have done so.
It's certainly possible, though you have to make sure your broker offers them, and there may be regulatory or tax consequences for some people depending where you live.
Currently you can get them out to January 2026. e.g, Jan 2026 $50 calls are bid/ask $22.60/$24.60. In Canadian dollars, of course.
With the stock at $68.49, and a likely buy execution of about $24.20 or better, the implied interest rate is around 5.3%--relatively reasonable.
I like the firm as well, but do remember that just because their earnings and share price have been rising in a smooth and steady way for years, they may not always do so.
A really crude way to think of their business is a tripod: gas sales, convenience store sales to people stopping for gas, and standalone convenience stores.
The most prominent possible fly in the ointment is that gas stations will probably not be a very big industry 10-20 years from now compared to now, and a lot of their convenience store sales are from stores attached to gas stations.
Selling biodiesel to truckers will likely continue, but at some point there will be "peak pit stop".
This outlook may account for the more modest valuation multiples recently, despite the excellent (so far) business results.
Multiples of (smooth) earnings are half what they were in 2015, though they were higher than usual at that point.
Every business has its potential weaknesses, but it's worth enumerating them.
These days, Berkshire's two biggest risks are (IMO) (1) Apple's exposure to their China supply chain, and (2) Apple's exposure to their China sales.
Quite remarkably, at June 30th Apple stock was more than half of Berkshire's equity portfolio at market prices.
If there were a secret program at head office hedging the position a bit at some point, I wouldn't be scandalized or outraged : )
Jim
