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Cheap Gas Prices Pump Up Convenience Store Stocks

Hey, You there. Yeah, I'm talking to you, dude in a Prius. Bought that car in 2008 because gas was $4 a gallon and you were sick of getting pimped at the pump.Truth is, there was some granola-eating hippy chick two doors down you were trying to impress. Don't act you did it for the environment son. You use hairspray on the reg and you're too lazy to bring a coffee cup to work so you pound Folgers in Styrofoam cups.

Here we are, about to turn to calendar over to 2016 and guess what? Gas is cheap. I'm talking trade that Prius in and get yourself a Hummer cheap. Forget about the inline four, I'm shopping for a used, gas guzzling V12. I've got so much money left over after filling up, I run inside and buy lottery tickets. I'm talking $20 scratch offs. Why? Cuz I'm rich from these gas prices. That's why!

Let's take a look at the chart here, going back eleven years. Gas hasn't been this cheap since the start of 2009, during the dark days of the Great Recession. During the recovery from late 2010 to the start of 2014 gas bounced around from about $3.25 to $3.85. The slide to the current lows has coincided with the slide in oil prices . So if you believe we're in for an extended period of low oil, the celebration should continue.

Think about all the things out there that gas is currently cheaper than. That two liter bottle of Coca-Cola ( KO ) is about 3 cents an ounce. A gallon of milk at your local Walmart ( WMT ) sets you back $3.50, or a little less than 3 cents an ounce. Six pack of Blatz. You're talking like 10 cents an ounce. Gas is less than two cents an ounce right now. No wonder I'm so generous at the BP ( BP ) . Anybody need anything? I got you. Sales of Hershey's ( HSY ) Symphony Bars have got to be through the roof. Cheetos Flaming Hots. On Fire. Those little ginseng pills next to the register, gimme three, I'm feeling adventurous. Then there's my personal favorite, gas station pizza.

Nothing says romance like splitting a personal pan pizza with that special someone while sipping on a 48 ounce fountain drink at pump 6. Sounds funny, but additional spending at the convenience stores is a big reason why the retail convenience store industry ranks in the top 5% of our Zacks Industry Rank. Casey's General Stores ( CASY ) is a Zacks Rank #1 (Strong Buy) in this business with a Value Style Score of "B" to go along with Growth and Momentum Style Scores of "A." That's what happens when you crush earnings folks. Seven quarters in a row here. Over the last year I'm talking 28 cent beat, 21 cent beat, 16 cent beat, then last quarters monstrous $2 versus expectations for $1.47. Now analysts have revised their earnings expectations for the current quarter, pushing up our Zacks Consensus Estimate from 76 cents to 84 cents, while current year numbers have ballooned from $4.85 to $5.69.

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COCA COLA CO (KO): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

BP PLC (BP): Free Stock Analysis Report

HERSHEY CO/THE (HSY): Free Stock Analysis Report

CASEYS GEN STRS (CASY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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