The intersection of the convenience retail and quick service restaurant (QSR) business models is an interesting one. actively positions itself at this crossroads. Their valuation was priced for perfection before the earnings. With the recent price drop, it is worth taking a look at to see if investors can get some value.

Looking at the information presented on their investor relations page, you can see that has most of their operations in the Midwest. They operate out of 19 states as seen below and are actually the 3rd largest convenience store chain in the nation.

With the war in Iran, gas and diesel prices have gone up and is benefitting from the increased fuel margins. However, that has led to concern among some about the sustainability of said higher fuel margins. Same store sales have also dropped YoY, which is another point of concern among investors.

My thesis on is pretty simple:

1. Investor fears are overblown and led to a dramatic selloff which removed any “excess“ in valuation. A margin of safety is now getting built into the stock with price targets in the $700-$800 range and with a forward PE around 27.

2. Worries over same-store and fuel sales will reverse as the company grows it’s store count, realizes operational efficiencies, and expands both inside-store sales and gross margins through its new 3-year plan.

Looking at the Numbers

reports in 4 different segments including Prepared Food and Dispensed Beverages, Grocery and General Merchandise, Fuel, and Other Services (car wash, lottery, ATM fees, etc.). The main revenue segment in terms of revenue is fuel right now especially with the elevated prices that consumers are paying at that pump.

There is some trepidation among investors and prospective investors about a decline in the fuel margins as oil and gas prices mitigate. In my opinion, these fears are overblown as customers will always need gas and lower prices just means more driving and more filling up.

So there will be supply and demand factors at work to offset any weakness in gas prices.

Quarterly data shows that revenue growth is strong at 24.33% for Q1 2027. Gross profit, operating income, net income and EPS showed declines which I attribute to them fully digesting and branding store acquisitions while aligning with their new 3-year strategic metrics.

With a -$2.4B net cash position, the debt front leaves something to be desired. Reducing the debt from M&A is ideal, but the majority of debt matures in FY 2030 and the average rate is around 4.3%, so not an immediate concern for the company.

With a ramp in revenues and earnings over the coming years, management should be able to tackle this level of debt. Additionally, their target debt to EBITDA ratio is < ~2.0x and they are sitting at 1.5x. Available liquidity sits around $1.4B, so they have plenty of flexibility when it comes to the business.

They will focus on debt repayments when the debt to EBITDA ratio starts exceeding 2.0x.

Operating cash flow reached $384.07 million and capital expenditures stayed pretty much inline with last quarter so free cash flow was $189.68 million. This may seem small now but with disciplined management they should be able to grow this in the future.

Operating and profit margins are low but fairly stable. Gross margins were around 21.82% last quarter and have remained above the 20% mark for many quarters now.

Investors have to watch the operating and profit margins carefully in the upcoming quarters to see how fuel and same store sales are affecting margins. Any disruption in the core business or revenue segments will warrant a re-rating by analysts and my thesis around the business.

3-Year Growth Strategy

This is the new growth strategy presented by management in their investor day presentation. At the top, they list their goal of EBITDA growth of 8-10% supported by everything below the roof if you will.

Management was keen to point out that is part of a select few businesses in this industry that have been able to have an EBITDA CAGR of 8% or greater for the past 10 years.

Their previous 3-year EBITDA CAGR was 16% versus the target of 10%. The main way to keep the EBITDA CAGR up is unit store growth, which will require a balance of M&A and new store builds.

Looking at customer demographics, has done a lot of research on their customers. Their rewards membership model is offering a better customer experience than peers. They have noted that 70% of Casey’s Rewards guests make > $50k per year and many of those guests spend more than guests that are not part of their reward program.

In addition, is driving incremental traffic by introducing new market launch products. They are estimating 17 exclusive and lead market launch items in FY 27. The customer digital flywheel they are introducing is noteworthy as it can streamline customer interactions and produce meaningful synergy with their rewards program.

One of the biggest drivers of growth is the prepared foods segment inside their stores. Their pizzas are a big attraction in these rural towns and areas with game-days producing much higher volume of sales than regular days. It’s going to be interesting to track digital sale growth in this omni-channel approach (Doordash, mobile app, other digital channels) as they keep improving digital experiences.

Wings seem to be the next major prepared food platform to grow as they are a high opportunity / low competition opportunity with ~50% of Casey stores not having a wing chain competitor within 5 miles. Plenty of customers also add wings to their pizza orders which results in larger basket sizes and greater revenue.

There is significant white space in their footprint to support future unit growth, as up to 75% of rural towns in their target distribution area still do not have a Casey’s. They have a case study that suggests that fuel gallons and inside store sales are higher in remodeled stores

In addition, it seems that new builds have significantly better fuel gallon, inside store and EBITDA than existing store locations. Thus it is clear that to increase operational efficiency across the board, management will have to focus on remodeling existing stores, new builds in appropriate locations and streamline operations at all stores whether new build or not.

They will increase the scale of their fuel supply and distribution in stores in the future so that the margins are supported.

Risks and Headwinds

A temporary issue I see with this 3-year model is the costs associated with remodeling all the stores they acquire through M&A. That will drive down the margins from these stores for a bit, but will be a driver of further EBITDA expansion later on.

The Iran war will not last forever, and when it does wind down, the fuel premium should drop and customers will pay less at the pump. I’m not too concerned with this as I think fuel will always be needed, especially in rural towns and areas, to get to convenient locations. You need to drive to get things and services in rural areas as opposed to cities where things are more walkable.

Moreover, if they realize fuel efficiencies and keep their fuel margins higher, then they might be able to stave off a portion of the hit when the war premium does fall off.

A final concern is a general economic downturn driven by lingering inflation. The Fed is already raising rates, but because monetary policy acts on a lag, the economic impact of today's hikes won't fully materialize for 6-12 months. We will have to monitor whether these increases effectively dampen inflation without crushing consumer demand.

Analyst Estimates & Valuation

Moving to analyst forecasts on , the average analyst consensus is a Hold but the price target is notably 32.42% higher than the current price at $790.53 per share. Some analysts have estimates that are over $900 and some as low as $687. But even the lowest estimate is higher than the current price giving some margin of safety in the name.

Projections for future years look good for FY 2027 but less so for FY 2028 and FY 2029. Analysts are anticipating 18.79% revenue growth and 11.46% EPS growth for FY 27. Free cash flow does look good for the next few years which might be the most important metric for a prospective shareholder.

In terms of capital allocation, has been increasing their dividends pretty regularly and also buy back their shares.

My ardent wish is that management sees a discrepancy between fair value and stock price after the earnings as a way to increase value for shareholders by using some of the new $1B share buyback authorization.

As noted in the beginning, I wrote a put on this stock after the large drop post earnings. The risk-reward profile in such a position is high; if I’m assigned shares, I can hold the position or sell covered calls at a higher strike price. If I’m not assigned, I will collect the premium anyways.

As always, my content is not financial advice and you should always do your own due diligence when investing your money.

Share Bearded Investor

A quick update about my portfolio. I sold and for a few reasons. I bought those ETFs, before I researched and the 25%/75% option overlay flexibility. This is the preferred method of covered call option overlay as it caps less of the upside of the Nasdaq.

I was able to sell and and buy over 250 shares of . With the rest of the capital, I bought a bunch of my existing holdings: , , and .

IBKR broke up and sold the in small chunks of shares, so instead of showing you pages and pages of transactions, I’ll just include the current portfolio.

You can see I evened out the portfolio nicely. For , I chose to buy a few more shares to get it to 200 shares total. If goes on another run in the near future, I should be able to write 2 covered calls instead of 1.

For , I didn’t do anything as I just plan on holding these shares for several years as they keep building their free cash flow and balance sheet.

I bought another 132 shares of to bring my to over 1000 shares. I believe that has plenty of upside in the next few years, so adding on weakness or below my average cost is a smart idea for me.

I added to and . My goal is at least 100 shares of and 100 shares of . This may take some time as I add using paycheck contributions and dividend reinvestment.

Finally, I will continue to add to and the tech stocks in the short to medium term to consolidate those positions further.

As always, my content is not financial advice and you should do your own due diligence before investing your money.

has been compared to the of China. And it’s no wonder why. They have the cloud business in AliCloud, the logistics business in Cainao, the e-commerce piece with Tmall and TaoBao. But add to that the AI labs, frontier LLM models, semiconductor/chips and so much more that it may be more apt to compare to a combination of US big tech firms, not just .

I think it would be helpful for my readers (and me) to understand the details of their business before we dive into the financials and more.

What Does Alibaba Actually Do?

is a sprawling empire. If you want to invest in this behemoth, you have to understand it’s pieces along with it’s strengths and weaknesses.

Prior to the August 2026 restructuring, they used 6 groups to organize the business. However, with the latest restructuring, they consolidated into 4 main business groups as shown below.

I’ve included the new business groups and how the current revenue segments are being reported until their next earnings report. One of the most important changes is the new AI Labs and Applications business group that houses the AI model laboratories and LLM models.

The other major changes are the new consolidated Alibaba China E-Commerce Group and T-Head (their semiconductor/chip development business) is now under the AI Cloud and Computing Services group along with Alibaba Cloud.

These 4 business groups are a more consolidated way to report similar business functions and operations. In their own words:

The main cash cow is still the e-commerce segment under Alibaba China E-Commerce Group especially going forward with the integration of domestic and international segments.

Using the old reporting format, you can see the revenue numbers for the different segments up till the restructuring.

* A quick note here that “Eliminations from growth” are adjustments made to subtract internal transactions, divested operations and/or non-operating items so the reported numbers reflect true organic business expansion.

A Snapshot of Financials

Ok, so we have an understanding of the building blocks that make up currently. I want to look at what their financials look like right now including their latest earnings report.

Looking at the Q1 2027 revenue and profits on stockanalysis.com, we see a 8.6% revenue growth YoY with a huge deceleration in the EPS and EPS growth rate to the tune of -79.39%. We will dig into more of the financials to discover reasons for the drop, but gross profit, operating income and net income were all down in the last quarter.

Looking more granularly at business segments, we see a deceleration in the e-commerce business of -8.25% YoY. I think this is mainly due to tough competition from domestic companies in that space, as management attributed this to weaker transaction activities.

Quick commerce saw some nice growth which management attributed to higher average value orders and enhanced fulfillment logistics efficiency while at the same time maintaining their market share. Specifically, they are focusing on high-value food orders and non-food categories.

The real story is the growth in AI Cloud and Compute Services and AI Labs and Applications at 44.94% and 15.82%, respectively. This is a massive amount of growth in these business units, and I could see these groups becoming a larger and larger portion of the total revenue mix.

The newly combined AliCloud and T-Head division is accelerating nicely. In addition, the frontier model portfolio was upgraded recently with adjusted EBITDA loss narrowing QoQ.

I shared in a recent note on that their net cash position is still strong at ~$17.8B. However, the debt they are adding onto their balance sheet is increasing and needs to be monitored just in case we have a situation where net cash dips into the red.

Speaking of red, free cash flows remain negative at -$6.67B. While this is less than ideal, it is par for the course for these big tech players both abroad and here in the US apparently. The negative free cash flow is due to incurring high capital expenditures. They had 75% higher capex YoY in the quarter ended in June 2026, spending roughly $9.975B.

A clear trend is emerging from the data of their last earnings report. They are increasing AI infrastructure spend but developing AI infrastructure, AI models, AI labs, cloud and everything else quickly.

In my opinion, this is the reason for the temporary weakness in their net income, EPS and free cash flow, but will pay off in the long run if we are to believe the AI narrative as a whole.

With the margins, you can see last quarter had a large discrepancy between operating and pre-tax margins which indicates a large amount of non-operating items. In the most recent quarter, it looks like the core business improved and there was less impact from those non-operating items.

Let’s take a look at their operating costs from their investor presentation.

Importantly, it looks like they were able to actually reduce sales & marketing expenses YoY, but the other costs rose slightly. All of these are excluding stock based compensation.

However, the balance sheet still looks strong with net cash around $17.8B, cash and investments around $57.5B and total debt at $39.74B. This is all while their operating cash flow increased and capital expenditures decreased QoQ.

Lottery Tickets With AI & Cloud

Even though there seems to be some pain with negative free cash flow and some deceleration in parts of the main e-commerce business, there are many reasons to be optimistic on .

First, as discussed above, there is the rapid growth in the AI Cloud and Compute Services group. With the addition of T-Head to the business group, this unit is favorably positioned to continue being the largest cloud provider in China with 38.1% of the market in 2025.

Their proprietary chips like the Zhenwu line are being used by over 650 external customers through AliCloud further strengthening the synergies between T-Head and AliCloud.

In addition, they were able to launch a foundation model Qwen3.8-Max within three months of it’s prior version. As of this writing, they are up to a 2.4 trillion parameter model with Qwen 3.8-Max. It seems competitive with domestic rivals like Moonshot AI’s Kimi K3 and DeepSeek. The major takeaway is that they have an impressive fleet of models that do everything from audio, video, reasoning, image, code, multi-modal and more.

QwenWork is their version of agentic AI which works on the organizational and individual levels with it’s deep integration with AliCloud and DingTalk. QwenApp is like their ChatGPT for consumer AI where it is integrating with their e-commerce offerings through Tmall, Taobao and TaoBao Instant Commerce to drive sales and agentic AI use.

This flywheel approach across AI and e-commerce businesses unlocks new growth opportunities; they take that feedback and enhance their models and user experience with it.

On the capital allocation front, until just this past quarter, was retiring shares left and right. They bought back over 200 million shares from FY 2023 to FY 2025. They slowed down the pace a lot in FY2026 predominantly because they reinvested into the business. But if they are able to start buying back shares in earnest again, that will start to drive up EPS.

Competition and Risks

There are real risks to be considered as well. The two main risks I can see are domestic competition with and and geopolitical tensions.

has a good hold on the cloud market share at roughly 38% but and are nipping at the heels with an estimated 16% each currently. If the market share drops aggressively, then the cloud and AI business groups might not be able to offset weakness in the e-commerce business fast enough.

Geopolitics is always an issue when it comes to investing in equities based in foreign countries. Issues like what China will do with Taiwan, tariffs, country-level tech IP and more will dominate investor mindsets when looking at foreign assets. This will definitely impact investing patterns and can be a factor in what a stock may do after a bad or good earnings report.

Analyst Estimates and Valuation

With at roughly $108.6 a share right now, the market cap is around $269B. With an average price target around $186.07, analysts see a 71.4% upside in the stock from the current price.

Looking out to FY 2027 and beyond, analysts are anticipating increasing revenue growth to 14.22% in FY 2029. They also see very strong EPS growth in FY 2027 that tapers off in the following years but which is still higher than revenue growth rates.

Importantly, the projection of free cash flow seems to go positive in FY 2028 and beyond. While it is always difficult to make projections many years out, analysts seem to be positive (no pun intended) on positive free cash flow going forward.

Looking at valuation ratios on stockanalysis.com, what stuck out to me is that the PEG ratio, or P/E over growth ratio, is only 0.41! As a reminder, a PEG ratio of 1.0 is about fairly valued, anything below 1.0 may indicate undervaluation, and anything above 1.0 may indicate overvaluation.

The current PE is 24.48 but the forward PE is at 13.24. This would be a ridiculous multiple if you assigned it to or .

Bottom Line

I like the growth prospects of Qwen, QwenWork, QwenApp, AliCloud and other AI products and services, but I’m also monitoring their core e-commerce business growth. It is truly an amazing company in all that it does and continues to improve upon.

If were to drop more and hit my targets ($90-$100 per share) for acquiring the stock (you have to acquire a great business at the right price), then I would be writing a portfolio update piece right now instead of a deep-dive article. Until then, this remains on my watchlist while I build my capital.

As always, my content is not financial advice and you should do your own due diligence before investing any of your money.

This brings me up to ~230 shares in so far. Now let’s discuss the elephant in the room. The US met coal equities are taking a beating and they account for big paper losses in my account today. The account is down $4k-$5k on those equities alone, which in all honesty, doesn’t bother me because those are long-term bets.

However, on the positive side, selling the covered call proved to be correct and I’m currently up over 50% on that option.

The option is not doing well and has dropped below the $600 strike of the contract as of the time of this writing.

My plan accounted for this possibility when I sold the put. I will hold the option instead of rolling for now. If I’m assigned from now till expiration in mid-October, then I will sell covered calls on the resulting 100 shares of to offset margin interest.

The stock has already removed the excess froth and extreme valuation from this huge price drop. P/E has dropped to roughly 28 from 40+. Analysts are positive on the stock with a ~$800 average price target. With a strong balance sheet, management guidance for store growth, M&A possibilities, geographic white-space growth, and so many other factors, I’m not concerned about holding these shares AFTER such a large price drop.

I’m attaching their investor day and other presentation here for you to make your conclusions, but in my opinion, this drop was a strong overreaction:

https://investor.caseys.com/static-files/282c53ca-5901-433f-bda2-730dc4bd84b9

https://investor.caseys.com/static-files/adcff974-e24d-4004-82be-a68b9b66c273

I will have a deep-dive on after my deep-dive so stay tuned for that.

As always, my content is not financial advice so please do your own due diligence before investing your money.

This was a judgement play based on pre-market activity and just an opportunistic move with regards to the AI slowdown news. I exited quickly and took the profits to invest $500 into . I bought another 10 shares to bring that closer to par with my other ETFs.

The main move I did after that was to sell a covered call on . I meant to do this last week; unfortunately, I was busy and could not get around to placing the trade. As you can see in the chart below, the MACD and the RSI crossed over and are showing a break of the strong move that led to local highs in recent days and weeks.

In addition, higher met coal prices are putting pressure on steel margins and could limit steel production which impacts met coal prices. The market seems to have noticed that a few days ago and US coal equities have reversed. This is why I wanted to make this play last week, but I determined that in the absence of other met coal price catalysts, I could still sell a covered call.

I’m prepared for either outcome. If met coal prices rally for some unknown reason and I get assigned, I still have ~90 shares of and 496 shares of providing ample exposure to my coal trades. I can also roll the option out if I want to keep those shares.

I will use the option premium and the money from assignment to add to or perhaps to a new stock for the portfolio.

If continues the downward trend, I will keep my shares and keep the premium. I received ~$1000 for this strategy and I will use it to grow my position as discussed.

That’s all for today fellow investors!

As always, my content is not financial advice and you should do your own due diligence before investing your money.

I will likely keep updating this evergreen article to be ever more useful and findable. The reason for that is this might be the most important article you read today and I want to make sure you see it.

In this article, I will show you how I look for and find stocks that can deliver financial freedom to those who invest in them. We are going to look at high-level concepts, but my hope is that you get immense value from this article.

The Magic of Compounding Over Time

Albert Einstein called compounding the 8th wonder of the world. Why? Because it’s a fact! Compounding is the basis of investing in the stock market.

You can compare any investment by its CAGR which stands for compound annual growth rate. It is the average annual growth rate of an investment for a period spanning multiple years.

Thus, if I had investment A that had a 26% CAGR over 3 years, I would know that I roughly doubled my investment after those 3 years. Then I could compare that to investment B that maybe only had a 10% CAGR over the same 3 years. Every year, each investment compounds the initial investment to the tune of their CAGR and snowballs that year over year.

For long term investors, CAGR is an important metric that ultimately condenses everything that we will talk about in this article to a normalized return over a set period of time.

If you want an AMAZING CAGR calculator, Stock Analysis has one here for free so check it out with your own investments - CAGR Calculator.

When you hear these super investors returning a high annual return for 10-20 years straight, it is compounding that is responsible in generating such huge wealth after that timeframe. Their money is building upon itself year after year.

Durable Moats and Competitive Advantage

Warren Buffett popularized the term “economic moat“ where he compares a great business to a fortified castle with a moat around it. The idea is that the business can fend off competitors using said moat and thereby protect revenues and margins.

There are several kinds of moats that a business can have though if you think about it for any length of time. A company like has a brand and patent moat; they have literally patented their brand and recipe.

Still others may have a technological moat and one of the best examples of this today is . manufactures the EUV (extreme ultraviolet) machines that can print the nano-scale circuit patterns onto silicon wafers used ubiquitously in the semiconductor industry for AI.

These machines cost hundreds of millions of dollars each and are so complicated that basically is a monopoly. The idea is the same though: fight off competitors by some means to protect your product pricing power and thereby increasing revenues which trickles down to your profit - how much money you keep.

The longer a business can keep their moat undisturbed and strong, the longer the castle (the business) can thrive and compound.

The Twin Engines of Growth

I wrote about one of my favorite investing books, 100 Baggers: Stocks That Return 100-to-1 And How To Find Them by Chris Mayer, in one of my Substack notes. In it, he talks about the ‘twin engines of growth‘, which he describes as revenue/earnings growth AND multiple expansion (the price multiple that everyone is willing to assign the stock).

Why do you need both?

Well it may be obvious that you want to invest in growing companies; those that are showing increasing sales and the ability to keep more of what they earn. This provides shareholders ample reason to buy and hold the stock - capital return, reinvestment, debt reduction to name a few reasons.

But why multiple expansion? An increasing multiple makes it that much easier for a stock to reach a much bigger return than a company with a stagnant multiple with the same growth. It also indicates that you should try to get a stock BEFORE the multiple expands, that is to say, you want a stock that has a low multiple and high growth. This is easier said than done because as soon as a good business starts rolling, the cat’s out of the bag.

Chris mentions MTY Foods as an example which started with a 3.5x multiple which is basically a 3.5 P/E ratio. Their earnings rose 12.4x in a decade but their P/E ratio went from 3.5 to 27. So you can see the power of the multiple or P/E expansion on a stock’s returns.

Concentration Versus Quantity

No matter what you invest in, you have to make it worth your while. There is no point in investing $1 and getting a 10x and having nothing to show for all the time spent researching and analyzing that 10x investment.

That’s why I’m a firm believer in concentrated positions whether you invest in individual stocks, ETFs, mutual funds, gold, crypto or anything else. You have to put your conviction AND wallet on the line (within reason of course). There are plenty of positions I own today that I wish I had invested more capital in when the risk/reward was much more desirable.

Many famous and successful super investors, investors who manage portfolios over $100m, are proponents of concentrated portfolios. Look at the holdings of Mohnish Pabrai or Bill Ackman as examples to this approach (I linked their Dataroma portfolios). These are billionaires fund managers using concentration as a tool in their investment philosophy.

Founder CEO-Run Businesses

What does a company like or have that maybe another company does not? The CEO is the founder of the business. These CEO’s have the ultimate skin in the game in running their businesses and definitely want to see them succeed more so than an external CEO.

Somebody who has poured their blood, sweat and tears into a project knows this is true. Usually these founders have a lot of shares of the stock as part of their pay packages and compensation. It is incumbent on them to run their companies like a business but also to actually believe and achieve their goals.

Elon Musk recently stated of the website that their mission is as follows:

"You want to wake up in the morning and think the future is going to be great - and that's what being a spacefaring civilization is all about. It's about believing in the future and thinking that the future will be better than the past. And I can't think of anything more exciting than going out there and being among the stars."

-Elon Musk

By having skin in the game, these founders may invest more in research and development and make better acquisitions than an outside CEO coming in to manage ‘just another company‘. Even getting a company to join the S&P 500 or Nasdaq requires a great deal of commitment and skill on the part of management.

Intelligent Capital Allocation

Good capital allocation is the demarcation between a company with good fundamentals and a company that has that good fundamentals AND actual value to give back to shareholders. You want to invest in the latter. Capital allocation can come in many different forms:

• Share repurchases when the stock is undervalued

• Dividends that are well covered by cash and operating income

• Business reinvestment for R&D, debt repayment, PPE, etc.

• M&A that will be a growth factor for the new entity

Some of the biggest returns came from stocks that were ‘cannibals‘ of their own shares. Look at or even in my own portfolio which bought back their shares rapidly just a few years ago. These share buybacks do a few things. They reduce the outstanding share count ostensibly, but behind the scenes they increase EPS because the denominator is being reduced.

Mohnish Pabrai exemplified share buybacks in his presentations and showed the magic of them. Below, he shows how share buybacks change the return of a stock with everything else being kept the same. You can get returns that are orders of magnitude higher in a stock that is getting their shares repurchased aggressively.

In addition, as part owner of these businesses, you as the shareholder get a larger percentage of the business as the pie shrinks. Cash flows are sent to a shrinking base, and as long as the business is not disrupted, those cash flows to shareholders become larger and larger.

Serial acquirers are also notable; companies like Constellation are revered for their ability to acquire software companies that are net positive to their financials and keeping their margins high. Through these high quality acquisitions, Constellation has managed to keep growing all without retiring any shares.

I could go on and on with examples for these concepts that have changed my investing outlook. Since I will update this article from time to time in the future, I will leave it here with you, the reader.

I look forward to your comments on this article and if you have suggestions, please let me know and consider subscribing to my Substack if you haven’t done so!

As always, none of my content is financial advice. Please do your own due diligence when investing your own money.

Share Bearded Investor

is a new name that I have not talked about on this channel, but they have been on my watchlist for a while. is in the general store category that operates convenience stores and gas stations in the midwest and other rural places. The P/E was in the 40’s before the post-earnings drop and is coming down nicely; however, their earnings and revenue beat estimates.

The reason for the drop is mainly because inside same-store sales increased only 3.2% versus 4.3% a year ago. In addition, their fuel same-store gallons sold were down 0.3% compared to prior year. This is all to say that management kept guidance unchanged for the year.

Moreover, they are running ahead of schedule, as per their investor presentation, on the integration of their acquisition of Fikes who owned the CEFCO convenience store chain. This acquisition adds 148 stores in Texas, 40 in Alabama and Florida, and 10 in Mississippi which really expands their position in the nation.

With analyst estimates in the $800’s, growing revenue and earnings, and the growth in number of stores, I was able to write a put on this with a short expiration date at a strike of $600 getting about $1150 of premium. My plan is to keep the cash safe for now just in case I need it. If the price does head below $600 and I get assigned, I will start selling covered calls on the position which should more than cover the monthly margin.

After the drop, this seems like a good risk/reward play at least for the next 20-30 days.

As always, this is not financial advice, so please do your own due diligence before investing your own money.

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