This Convenience Store Made Josh Brown's Best Stocks List. It's a Rare Winner From Higher Gas Prices

Why It Matters

Higher fuel prices traditionally strain retailers, but Casey’s leverages the cycle to expand revenue and profit, highlighting a resilient business model that can attract growth‑oriented investors.

Key Takeaways

• Gas price spikes lift Casey’s revenue 33%.
• Inside-store sales drive 62% of gross profit.
• Same‑store sales rose 4% quarterly, 8% two‑year.
• Planned 80 new stores in 2026, 8‑10% EBITDA growth.
• Fuel margins ~15%, food margins ~58%.

Pulse Analysis

The convenience‑store sector has long been a bellwether for consumer spending, but few operators turn rising fuel costs into a competitive advantage. Casey’s General Stores distinguishes itself by coupling a dense network of 2,900 Midwest locations with a robust in‑house food operation. When gasoline prices climb to $3‑$4 per gallon, the chain’s fuel revenue can jump 33%, providing a top‑line lift that many rivals cannot match. This dynamic is amplified by the company’s strategic pricing, where prepared‑food items like breakfast pizza command margins near 58%, offsetting the thinner 14‑15% fuel margins.

Financially, Casey’s has demonstrated consistent same‑store sales acceleration, posting a 4% quarterly increase and an 8% gain over a two‑year period. The disproportionate contribution of in‑store sales—accounting for 38% of revenue but 62% of gross profit—underscores the importance of its food and beverage portfolio. Moreover, the firm’s disciplined cost management, reflected in labor hour adjustments and competitive pricing (single‑topping pizzas $1‑$2 cheaper than rivals), sustains profitability even as wholesale fuel costs fluctuate. These fundamentals support the projected 8‑10% annual EBITDA growth and justify the bullish technical outlook, with the stock trading above key moving averages.

Looking ahead, Casey’s expansion plan of 80 net new stores in 2026 signals confidence in market penetration and economies of scale. The company’s management believes in‑store demand remains resilient until pump prices breach $5 per gallon, positioning the current $3.82 average as an optimal sweet spot. Investors should monitor the 50‑day moving average around $647 and the 200‑day level near $559 for potential entry points, while remaining mindful of broader macro‑economic pressures that could alter fuel pricing trends. Overall, Casey’s blend of fuel revenue upside and high‑margin food sales creates a compelling growth narrative in a sector often viewed as defensive.