Like many of you, I am still digesting the debate from last night. So, I am focusing on other matters, such as the environment. For the record, VP Joe Biden said his $1.7 trillion energy deal would end subsidies for oil and gas drilling, but would not ban fracking, except on US state-owned land.

The money will be spent on green R&D and tax credits for renewable power and electric vehicles, and 40% of the sum will be directed to disadvantaged communities. His plan was attacked by President Trump as a waste of time and money, but the plan makes more political sense than giving cash to applicants, regardless of the impact on the environment.

While this took US oil patch companies down early today and has since reversed, it was greeted with a rise in our Europe oil stocks, which are already pressured by their home governments to invest in renewables.

Going Green

Spanish airport operator Aena (AENA) opted to give its shareholders the right to vote on its climate change and renewables policies starting next year. The stock has since risen.

Elon Musk, the head of Tesla (TSLA), insists that the reason he wants to own lithium production sites himself rather than buying from existing miners is that they are unclean. He specifically cited SoQuiMich (SQM) of Chile (sold) because it uses energy to evaporate the water in which the lithium winds up. He cited Chinese lithium miners who roast dug up rocks to extract lithium, causing air pollution.

Australia is building wind and solar energy for Asian markets in Pilbara, now home of LNG. German Eon SE, EONGY, is up 1.2% because is has a lead in green energy. Hopes that it can help cut food waste led to a 7% rise in Irish Greencore (GNCGY) on Thursday, October 22. Sino-Canadian Canadian Solar, CSIQ, gained 0.5%.

An example of foreign government pressure at work: today France called upon Engie, which giant ute Veolia Environnement (VEOEY) now controls pending a Paris court ruling, to delay its investment in Next Decade Rio Grande, a US shale project. The move means the program is unlikely to go forward. We own VEOEY stock, which gained 1.33% today on Wall St. Vive la France.

Tomra Systems (TMRAF) rose today in Norway after it presented a sustainable waste program in English. It uses sensors to sort food, drugs, metals, and empty cans and bottles for recycling, in an attempt to solve excess garbage. The European Union wants to recycle 77% of plastic bottles by 2025 and 90% by 2029.

The empty beverage containers TMRAF recycled last year kept 17 million tons of carbon dioxide out of the atmosphere. Its steam potato peelers processed 15 million tons of spuds which otherwise would have gone to waste. Its metal recovery systems saved 715,000 tons of metal. Its mining/sorting is just coming out with new systems. It is heavily invested in both sorting and recycling for feeding China. New sensors will use spectroscopy, which China wants.

But disciplined Germans are its biggest recyclers, at 98%, beating the USA top state, Michigan, only at 92%. It is also building on the use of bag drops in e-commerce, more local self-service, initiatives by bottling companies to up levels, and also biodegradable bottles, which it helps retailers develop, but does not own.

Its owned businesses have gained 28% in revenues annually in 2004-2019. But while backlog grew in 2019, its sales only rose 7% (in constant currencies). But it expects that recycling will boost the annual growth rate 10% to 12% from last year to next year, and 10% to 2023. It expects margins to grow to 18%. Note that institutions, mostly Norwegian or US ADR banks, control 50.3% of TMRAF.

Drug dealers

Jim Cramer tipped Astra-Zeneca (AZN). The UK drug firm fell because AZN paid a $50 million milestone to Innate Pharma (IPHA) for head and neck cancer drug trials. AZN fell .05%. Because of fears that a Biden healthcare plan will cut drug profits, most global pharma stocks fell today: Beigene (BGNE), Bristol-Myers (BMY), Compugen (CGEN), Eisai (ESALY), GlaxoSmithKline (GSK), Novo Nordisk (NVO), Dr. Reddy's (RDY), Roche Holding AG (RHHBY), Teva Pharmaceutical (TEVA), and Thermo Fisher Scientific Inc. (TMO),

But not Merck (MRK), which was initiated as a buy by Truist Securities. Nor Grifoles, or GRFS, gained because Spain kept its government yesterday. I own both US shares and the Spanish and Canadian one tipped by Martin.

Industrials

British BAE Systems (BAESY) rose 3.3% today as a result of hopes that the US will continue its alliances post-Trump. Johnson-Matthey, JMPLY, gained 1.6% on exhaust cleaning palladium and platinum, not gold. Gold fell below $1900 per oz after Russian Far East goldmine Sukhol was taken over 100% by Polyus (OPYGY), for $128.3 million. It reportedly has the world's second largest gold reserves. Our Canada gold mine Kirkland Lake (KL) is down 1.2%.

Japanese factory robot maker Fanuc (FANUY) gained 1% today here, but was up 13% in Japan. Energy shares rose on planes flying again after the FDA okay'ed Gilead (GILD)'s COVID-19 treatment. BP, RDS.B, and SLB, are all up despite having fallen at the opening.

Unlike Tesla, Nio (NIO) of China is down today by 0.5 %. It is scary, but I am hanging in there. It makes and sells electric cars in China and was tipped by Max Deml, of Vienna's Oeko-invest with which we trade ideas.

Banks

European bank shares rose thanks to good results from Barclays.

Special Report: Alimentation Couche-Tard (ANCUF)

This is a quirky Quebec firm with a global mission, operating convenience stores, mostly at the side of highways. It was written up by analysts of CIBC World Markets Mark Petrie and John Zamparo (in the last issue of Investor's Digest of Canada.) It trades as ANCUF on the pinks and as ATD.B in Toronto.

CIBC raised its target price for the Canada stock to C$52 from 49. It was C$43.24 or US$32.92 yesterday, off a bit. It is also now covered by Argus, which rates it a buy, but doesn't tell readers much. It is also rated buy by Canaccord Genuity, Stifel Nicolaus, and Bank of Montreal up north.

They say that over the past decade, the share has returned 500% and also boosted its dividend another 13% year-over-year, and 125% in the past five years. ANCUF has bought up groceries and convenience stores since 2004, starting with the US where it owns Circle K and added South Dakota and Minnesota Holiday shops. It also sold CrossAmerica Partners LP (CAPL), once part of Circle K. COVID-19 has helped more than it hurt: while sales of gasoline fell, US fuel margins are at record highs. E-cigarette sales fell less than expected.

ANCUF uses an April FY and just reported on Q1 when the recovery from the pandemic began. It beat expectations by a nice margin on fuel sales and lots of merchandise sales, plus careful cost controls. With people driving less, the merchandise segment with its organic growth is appealing to CIBC, which also expects more deals.

It recently dropped a plan to buy US Speedway Stores as the price was too high. The share is not widely held by institutional investors since the 4 founders own 67.11% of the shares outstanding themselves, each through a Quebec foundation.

The competition for deals remains high, and while ANCUF has the cash, it will deploy it when a better deal comes or for share buybacks. It last did one in FY 2018-9, cancelling $471 million of shares.

For Q1, ATD.B reported an adjusted eps of 71 cents (US) to July 19, up 47.9% from the prior Q1, even though its 12-week revenue fell 31.4% to US$9.71 because of falling fuel sales. It beat the forecasts of BMO (39 US cents) and the consensus (41 US cents) handily thanks to non-fuel sales.

ANCUF's FY sales in 2020 hit $US2.36 billion, 124% of the prior target set. EBITDA topped $6.038 million, up from $4.718 million the prior fiscal year. However, direct compensation as a percent of EBITDA has been falling for the past five years as translated into loonies from US dollars because of phantom shares.

It pays its Canada brass pensions in “phantom shares,” which only pay off if the stock gains in the two years following their issue in Toronto. It contributes in Europe to defined benefit plans unless they are overcapitalized.

In many US states, ANCUF covers the cost of future remediation of damage from fuel equipment, movement, and storage. It is green. It uses Towers Watson to compare its staff and payments to those of peers in similar businesses, size, capitalization, and geographies every two years.

What appeals to me is that the outfit is not only active in North America, but also in Ireland, Poland, Russia and the Baltics, and Scandinavia, all while using the Circle K brand and leasing land and facilities. It has a joint venture with Canopy Growth's Tweed Inc. (CGC) in Ontario and other franchises in Europe, as well as 14,500 stores around the world.

In Sweden, it also offers car rental agreements, perhaps testing a new business line. It uses revolving credit in US and Canadian dollars, and euros as well as bank overdrafts, often with interest rate locks well below 2%. It aims to keep its exposure to foreign currency down by hedging Europe. It will report on its Q2 in November under IFRS rules with Price Waterhouse in US dollars. Based on the report, I would recommend buying sooner.