This convenience store made Josh Brown's Best Stocks list. It's a rare winner from higher gas prices

Same-store inside sales rose 4% in the last quarter (+8% two-year stack); Casey's operates ~2,900 stores and plans to open 80 net new locations in 2026 while targeting 8%-10% annual EBITDA growth. Fuel yields ~14%-15% gross margin (~$0.41/gal) versus prepared foods/dispensed beverages at ~58%; inside-store sales are ~38% of revenue but ~62% of gross profit, and management says in-store demand remains intact up to ~$5/gal (current US avg $3.82). Technically the stock is in a clear uptrend, trading above the 50-day ($647) and 200-day ($559), suggesting resilience and a likely modest positive move on continued investor interest.

Analysis

Casey’s positioning as a “food-first” convenience retailer creates a multi-year structural edge versus fuel-centric peers: higher spend per visit and proprietary prepared-food SKUs amplify margin capture and increase switching costs for customers. That edge cascades into the supply chain — regional dough/cheese and commissary networks gain pricing power and volume leverage, while national fuel wholesalers see a larger share of gross profit migrate away from pure gallons.

Key reversal risks are mechanical and calendarized. A sharp disinflation in wholesale fuel over 1–3 months would flip the short-term arithmetic (retail repricing pressure → narrower gross profit per gallon) and could remove the recent top-line impulse; conversely, a sustained jump in wage/food input inflation over 2–6 quarters would erode the very in-store margins that underpin the premium multiple. Store-addition cadence is a multi-year execution exposure — subpar returns or above-plan cannibalization would compress unit economics and slow multiple expansion.

Practical trade layering: (1) a core long equity allocation sized to portfolio conviction with a rules-based re-entry on a controlled pullback (buy up to 10% worse than today, trim into any >30% rally within 12 months); (2) a 6–12 month relative-value pair: long the food-led operator vs. a larger, fuel-scale competitor to express the premium on in-store margin capture; (3) use option structures (long-dated call spreads) to cap cost while keeping upside optionality and buy short-dated protective puts around major crude moves to hedge the fuel-margin tail.

Key Decisions for Investors

• Initiate a core long CASY position (ticker: CASY) representing 1.5%-2.5% of portfolio NAV on weakness up to 10% below current price; target +30% absolute return over 12 months, hard stop at -12% from entry to control downside — R/R ≈ 2.5:1.
• Pair trade (6–12 months): Long CASY 60% / Short Alimentation Couche-Tard (ticker: ATD.TO) 40% to capture food-led outperformance versus scale fuel operators; target relative outperformance of +20% (or spread widening of ~300bps), unwind if ATD.TO outperforms by >15% or crude-driven industry rally exceeds 25%.
• Options hedge (3–12 months): Buy a 9–12 month call spread on CASY sized to 30% of the core long (e.g., buy 10%/30% OTM call spread expirying ~12 months) to retain upside with capped premium; fund with sale of short-dated calls only if willing to cap gains in a fast rally.
• Tactical protection (days–months): Purchase short-dated puts (30–90 days) ahead of major crude data points or OPEC meetings equal to ~10% of long position notional to limit downside from rapid fuel-margin compression.