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Casey's at 52-Week High: Here's Why the Momentum Might Last

Zacks Equity Research

Casey's General Stores, Inc. CASY touched a 52-week high of $158.21, before closing the session a tad lower at $155.75 on Jul 2. Notably, the company is benefiting from its Value Creation Plan. This includes new fleet card program, price and product optimization, cost containment efforts, capital reallocation plan as well as digital engagements comprising mobile app and online ordering capabilities.

Backed by these tailwinds, shares of this Ankeny, IA-based company have rallied approximately 25% in the past six months, outperforming the industry’s growth of 24.6%.

Let’s take a closer look at the aspects driving this Zacks Rank #1 (Strong Buy) stock, which flaunts a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Narrating Casey's Growth Story

Casey's remains on track with its value creation plan to improve sales and profitability. Also, management is focusing on improving distribution efficiency. Casey’s cost-reduction initiatives are likely to result in savings of approximately $200 million in store-level operating expenditures by fiscal 2021.

The company launched the new Caseys.com e-commerce website, initiated fuel price optimization platform across all outlets and will soon launch enhanced mobile app. At the end of fiscal 2019, the new fleet card program has more than 2,000 active cards and 500 new accounts.

Additionally, Casey’s fleet card program, which involves managing and monitoring of initial sales, back-end system processing, billing and other consumer-oriented services, is likely to lift fuel sales. The company’s digitalization efforts will help create a seamless shopping experience online as well as in-store and facilitate same-store sales growth.

Apart from these, the company is on track with its store expansion. During fiscal 2018, the company opened 85 new outlets, acquired 26 stores, completed 30 replacements, and remodeled 74 stores. In fiscal 2019, the company constructed 56 new stores and acquired 24. It closed 10 stores. The company replaced eight stores and have eight acquisition stores under agreement to purchase. Moreover, it plans to construct 60 and acquire 25 stores in fiscal 2020.

We expect all aforementioned factors to continue bolstering the company’s performance, and help it remain in investors’ good books.

Other Key Picks

Target Corporation TGT has a long-term earnings growth rate of 7.1% and a Zacks Rank #2 (Buy).

Costco Wholesale Corporation COST has a long-term earnings growth rate of 8.9% and a Zacks Rank #2.

Walmart Inc. WMT delivered average positive earnings surprise of 7.3% in the trailing four quarters. It has a long-term earnings growth rate of 4.7% and a Zacks Rank #2.

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