Casey's General Stores, Inc. (CASY): A Bull Case Theory

We came across a bullish thesis on Casey’s General Stores, Inc. (CASY) on Next Gen Investors Endowment’s Substack by Judah Kang. In this article, we will summarize the bulls’ thesis on CASY. Casey’s General Stores, Inc. (CASY)'s share was trading at $506.16 as of 13^th June. CASY’s trailing and forward P/E were 34.57 and 31.95 respectively according to Yahoo Finance.

Casey’s General Stores is strategically positioned to capitalize on a fragmented U.S. convenience store market, particularly in underpenetrated regions like Texas, which has over 16,000 convenience stores—12% of the national total—but where Casey’s holds just a 1.04% share. With roughly 60% of Texas stores independently owned, the market is ripe for consolidation.

Texas also ranks second in most-traveled highway routes, offering Casey’s a high-traffic environment conducive to fuel and in-store sales. Across its 16-state footprint, 72% of towns lack a Casey’s location, highlighting significant white space. The company is actively pursuing expansion through both new store openings and acquisitions, having added 354 stores from 2021 to 2023 via a dedicated M&A team.

Casey’s benefits from economies of scale, private distribution, and operational efficiencies, allowing it to offer more competitive pricing and broader product assortments than smaller operators, many of whom are selling under competitive pressure.

Margin expansion is driven by initiatives in private labels, technology, and supply chain integration. Inside-store margins continue to improve, with grocery/general merchandise margins at 34% and prepared foods at 59%. Private label penetration has reached 10% since its 2021 launch, supported by distribution center leverage. Tech integration includes a growing loyalty program with 9 million members, boosting personalization and spend. Advanced pricing software for fuel and an owned tanker fleet further optimize profitability.

Despite long-term EV adoption concerns, Casey’s rural focus and 75% non-fuel traffic reduce exposure. With 170 EV chargers already installed, it’s adapting to future demand while higher in-store ticket sizes during EV dwell time could enhance revenue. Although declining tobacco sales pose a headwind, Casey’s shift toward higher-margin categories strengthens its positioning. Trading at a ~29x forward P/E with a DCF-implied upside to $462/share, Casey’s offers a compelling investment supported by strong fundamentals, expansion potential, and resilient margins.

Previously, we summarized Tsoh Investment Research’s bullish thesis on Dollar Tree, which emphasized strategic pricing flexibility, improved merchandising, and margin expansion post-Family Dollar divestiture.  Casey’s General Stores, also a retail footprint expansion story, where private-label growth, supply chain leverage, and high-margin categories are driving scale and efficiency gains in a fragmented market.

Casey’s General Stores, Inc. (CASY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held Casey’s General Stores, Inc. (CASY) at the end of the first quarter which was 38 in the previous quarter. While we acknowledge the risk and potential of CASY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.