Alimentation Couche-Tard Inc. picked up another fan in the analyst community Wednesday, as Wells Fargo initiated coverage of the Montreal-based convenience store operator with the equivalent of a buy recommendation.

Analyst Anthony Bonadio launched coverage of the convenience store sector with overweight recommendations on Couche-Tard and Casey’s General Stores Inc.

“We are most bullish on [Casey’s and Couche-Tard] given their strong inside businesses (and associated reopening benefit, especially for [Casey’s]), positioning to capitalize on M&A, insulation from longer-dated headwinds, and attractive valuation,” he wrote.

Bonadio said consolidation is “inevitable” in the fragmented convenience store sector, and noted he prefers names — like Couche-Tard — that have a proven record in M&A.

Couche-Tard is often the subject of speculation when it comes to takeovers. It made an ill-fated run at buying Carrefour SA for $16 billion euros ($22 billion) in early 2021, and The Wall Street Journal reported in April that Couche-Tard engaged in deal talks with EG Group in a transaction that would have valued the U.K.-based chain at about US$16 billion.

Bonadio also noted that the outlook for fuel-sales growth is getting worse, in part because of the gradual ramp-up in electric vehicle penetration. While he didn’t directly mention the announcement, Couche-Tard recently highlighted its attempt to attract EV users by launching a network of charging stations that it said will expand to 200 sites in North America over the next two years.

Amid the uncertainty about fuel demand, Bonadio said it’s the so-called “inside sales” that round out the bull thesis on Couche-Tard and Casey’s.

“We find the model attractive given an ever-growing premium for convenience—it's arguably the last channel in retail with insulation from online threats. We see plenty of angles for growth from here, and favour leaders in the most accretive areas such as prepared food.”

Bonadio joins 12 other analysts tracked by Bloomberg who have buy or overweight recommendation on Couche-Tard. He set his price target at $65 per share, implying about an 18 per cent potential upside compared to the stock’s closing price on the Toronto Stock Exchange on Tuesday.