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Ahead of the Bell: Casey's General Stores

NEW YORK (AP) -- A Benchmark analyst on Tuesday initiated coverage of Casey's General Stores Inc. with a "Buy" rating, pointing to the convenience store company's growth and profitability opportunities.

Ronald Bookbinder, who also set a $73 price target for the stock, said that over the next several years Casey's could continue to increase its store base while boosting comparable sales and profitability, which could lead to years of revenue and earnings growth.

Bookbinder noted that while Casey's operates in a very competitive market, it tries to distinguish itself by operating profitably at highway locations within towns with populations of less than 400 people, which are often under-served by national-chain convenience stores.

"The company has successfully operated in these areas by combining both general store and convenience store formats and offering a broader selection of products than regular convenience stores at competitive prices," Bookbinder wrote in a note to investors.

The analyst noted that the company's most profitable products are its prepared foods, including its popular pizzas, adding that stores that have added pizza delivery have seen their pizza sales increase between 70 percent and 80 percent.

Casey's shares closed at $63.40 on Monday after rising to a 52-week high of $63.72 earlier in the day. They traded as low as $46.15 in mid-November.