Susser Holdings Corp (SUSS)

Susser Holdings, one of the largest non-refining operators of convenience stores based on store count in Texas, is also the largest non-refining motor fuel distributor by gallons in Texas. The company offers merchandise, foodservice, motor fuel and other services through its 325 convenience stores spread across Texas and Oklahoma.


The U.S. convenience store industry is highly fragmented with 10 largest store retailers accounting for mere 9% of total industry. The industry is estimated to be valued at $559.9 billion in 2009, with a CAGR of 4.2%. The industry is largely benefiting from the changing trend in consumer buying behavior that is drifting away from traditional supermarkets to convenience stores and hypermarkets. Moreover, a transformation in eating pattern has led to more food consumed away from home.


Susser, through its size should be able gain most out of its economies of scale in this highly fragmented industry. The company’s top-line for Q3’06 saw a rise of 14.6% on account of higher sales price of motor fuel combined with increased merchandise sales. Moreover, Susser’s concentration in densely populated area like Texas should help them to sustain this growth level.


The agreement with Valero during mid-2006 for long-term supplies of motor fuels compliments to Susser’s retail growth plan. Further, stability in energy price should be viewed as boon to Susser’s growth. To take advantage of these encouraging market conditions the company is planning to open 18 to 22 new stores in Texas during 2007. A favorable demographic environment in Texas should ensure a positive growth for Susser thereby making it a lucrative stock to buy.