Hunt for AI-proof trades turns convenience shops into hot stocks

Convenience store stocks are currently experiencing a surge in popularity, driven by investor interest in defensive investments amid concerns about the artificial intelligence boom's stability and the ongoing Iran conflict. Major players such as Alimentation Couche-Tard Inc., Casey’s General Stores Inc., and Murphy USA Inc. have seen significant price increases, with Casey’s leading the pack at over 54% growth this year.

The trend is fueled by fluctuating energy markets following the US attack on Iran in February, which has caused fuel prices to rise and become more volatile. Investors are finding refuge in convenience stores due to their essential role in daily life, particularly in areas like fuel, food, and nicotine products. Companies like Casey’s, which focuses on smaller towns across 19 states, and Alimentation Couche-Tard, benefiting from higher fuel margins, are benefiting from this shift.

Notably, Casey’s recent inclusion in the S&P 500 Index and a successful IPO for Yesway Inc. have further boosted interest in the sector. However, analysts caution that once geopolitical tensions ease, investors may turn their attention to other metrics like same-store sales and gas-margin sustainability, potentially leading to a period of lower growth.