NEW YORK (TheStreet) --Chilton Investment Company chairman and CEO Richard Chilton joined this morning's Bloomberg TV's "Bloomberg Go" to discuss one of his top stock picks, Casey's General Stores. (CASY - Get Report)
Casey's General Stores is an Ankeny, IA-based chain of about 1,900 convenient stores in the Midwestern states of America.
When seeking out a company to invest in, Chilton noted that his firm narrows in on businesses with a great model and that it can own for 3-6 years or even longer.
"What one wouldn't understand about convenient stores and why they're misinterpreted is everybody thinks they're volatile because of the spreads. But, that's totally changing in the industry for a whole host of reasons," Chilton told Bloomberg TV.
To that point, Chilton added that Casey's is the fourth-largest seller of pizzas in America.
"Through their chain, they sell two million pizzas a month, so they'll generate about $250 million a year just from selling pizzas, but they have a robust bakery business, and robust prepared food business," Chilton explained.
Additionally, Casey's has expanded to begin selling items outside of cigarettes and beer, it also sell commodities such as milk and eggs, Chilton noted.
"If you look at the consistency of the cash flows and the fact that in the Midwest they're in very small markets, they can grow for a very long time," Chilton said.
Moreover, when one examines Casey's they notice the company's forward PE, but also that it has an 8.3 times EBITDA.
"They've bought a bunch of companies there's some accounting issues with respect to amortization which skews the number higher. This is a cash machine, it's selling at 11% free-cash-flow yield right now, which is ridiculously cheap," Chilton explained.
Shares of Casey's General Stores were higher during earl-morning trading on Monday.
Separately, TheStreet Ratings has set a "buy" rating and a score of A- on Casey's General Store stock. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that TheStreet Ratings covers.
The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, reasonable valuation levels and solid stock price performance. TheStreet Ratings feels its strengths outweigh the fact that the company has had generally high debt management risk by most measures that it evaluated.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: CASY