Ok.... Now all the questions and all the confusions are finally put to bed . Now we are left with one question....
CST ..... Buy , hold, or sell?
Just hot this thread with one of those words.... I am personally not comfortable yet .... Which causes me to do stupid things.... Help
Ok.... Thx for the input..... For me I will slowly liquidate by 12/31/13.
Beta makes a great point.... Experienced a 15% price hit on FN when the original investors sold a big holdback block... When VLO sells its remaining 20% they will price it at a discount .
I think Chevy had a good post but the unit he saw in SC is not part of CST. I would say, before you do a knee-jerk reaction, spin-off typically do very well so if you can hold these shares you will be rewarded.
Things in CST's favor:
1)In parts of the country where the economy is thriving: Texas and Canada
2)They own 60% of there sites in the US. Is a real estate play.
3)They have bargaining power with vendors: CST is a large $13 Billion retailer
4)This is not a start up but an established business
5)Now that it is free from Valero, it will concentrate from just selling fuel to more profitable food
6)They sell products people are addicted to: alcohol, cigarettes, and coffee
7)They sell products every American needs: gasoline or diesel
8)They plan on paying a dividend.
Let it appreciate 20, 30, 40% before you sell. That is my plan.
I unloaded my CST shares today and had the chance and bought them all back cheaper. Why . Because I am not sure if CST will pop 10% and take out the discount sooner then later. That million plus share block trade right at the bell , over 30 million dollars by some hedge fund I presume got my attention. If you noticed CST had more then the usual one cent difference for bid and ask. The spread was 2 - 8 cents at times. My GOM Is telling me sell and cst buy Vlo while it is well below 40. In the long run with the divi VLO may be climb higher and faster then a retail stock and the volatility of refiners allow more opportunity to swing trade as the spreads is wide and the bid ask tight most time. I' m selling CST and buying VLO before VLO goes much higher. My two cents. Pole
Not that I know a lot about these stores, aren't their margins really thin? also, didn't XOM dump all or most of their outlet stations? That should tell you something. People are fickle in that regard. we have one corner here in SC with a citgo (only 4 pumps mom and pop store), a marthon that's fairly new (8 pumps or so) which gets a lot of traffic, a shell with 4 pumps (some traffic) and a new QT that has like 80 pumps. Unless CST opens more stations or buys them, how are they going to grow earnings? the same people come in and buy the same items. It's like KKD died to some degree. Planet hollywood etc... If I were you, stay with VLO, XOM and HFC. Why did you invest in VLO in the 1st place (oil refining/gas sales or the stores they sold the gas in)????? Food for thought if it's worth anything.
You're thinking of supermarket margins. Convenience store merchandise margins average over 20%, and larger chains can do up to 35% on in-store merchandise and as much as 50% on food service. Fuel margins range up to 5%, with mom-and-pop stores barely breaking even and large chains at the top of the range. Key is to convert pump traffic to store traffic.