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Casey's General Stores: Peak Valuation + Peak Margin

CASY operates 2,161 convenience stores across 16 states. 56% of its stores are in communities with less than 5,000 people and another 26% in locations with 5,000 to 20,000 people. CASY has two distribution centers with a third planned for FY21. Its unique store base and scale highlights CASY’s competitive advantage. Since 2010, revenue grew at 9% CAGR, propelling the stock from $35 to over $170. During this period, CASY averaged 68 net new stores per year, growing store base by 3.8% annually. CASY also remodeled/updated its aging store base, driving significant improvement in same store sales. Nationally, industry labor cost pressures led to increasing fuel margin for gas stations (gas margins are used to offset store operating cost). CASY’s fuel margin increased from 14 cpg in 2010 to 20 cpg in FY19. Recently, CASY announced a CEO change, bringing in former CEO of IHOP, Darren Rebelez. In the same month, its stock broke out to the upside as it beat EPS expectations and improved FY20 guidance.
   
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