Matthew Gan

CST Brands - Defensive Stock On The Upswing

CST BRANDS

Highlights

A defensive stock on the upswing; high expectations for proper and focused management

  • Fundamentals and valuation indicative of an overweight rating: Setting intrinsic value for CST Brands (NYSE:CST) at $38.75, there is a 29.5% upside gain, inclusive of potential dividends. CST is a primarily cash-based, consumer staples retailer. Compared to its peers, CST owns a significantly larger proportion of its locations and in turn is less operationally leveraged. Coupled with financial leverage in line with the industry, CST operates on a sound foundation.
  • Strengthening economy will lead to increased spending and travelling: The North American economy is on an uptrend. Unemployment is dropping (from 8.1% in 2012 to 7.3% in 2013 in the US), the
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