(This is The Best Stocks in the Market, brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — This isn’t complicated. When the price of gasoline increases from $3 to $4 per gallon, the income of those who sell gasoline increases by 33%. It doesn’t necessarily mean you’ll be profitable, but your top-line sales will be high. And in the case of Casey’s General Stores, this increases investor interest in owning the stock. I’m from Long Island. There is a 7-Eleven. I don’t think I ever went into Casey’s house. Thankfully, I have Sean, my research partner. One of the benefits of writing a column about the market’s blue-chip stocks is that we can identify stocks that would otherwise probably have gone unnoticed. Below is the story of one of them. Stock to watch: Casey’s General Stores, Inc. (CASY) Sean — Casey’s is a legitimate Midwest staple. Casey’s is a convenience store chain with 2,900 stores and an in-house food operation. It’s basically a quick service restaurant that sells gasoline. The brand has a cult following, and its breakfast pizzas literally bring people (seriously breakfast pizza goers, myself included) to its stores, and three out of four in-store transactions involve no fuel, which is a rarity in the convenience industry. Same-store sales increased 4% in the last reported quarter and 8% on a two-year cumulative basis. In fact, in-store foot traffic had increased enough for stores to add working hours to meet demand. In-store sales account for approximately 38% of revenue, but 62% of gross profit due to lower margins on fuel sales. The company’s fuel business has a gross profit margin of about 14 to 15 percent, or about 41 cents per gallon, while its prepared food and dispensed beverages have a 58 percent profit margin. Casey had periods of high gas production. In fact, their management team noted that higher fuel prices tend to be positive for business over the entire cycle. The initial oil crisis compressed profit margins as wholesale costs rose faster than retail prices, but the end of the cycle more than made up for it as retail price declines slowed. Using the Russia-Ukraine war as an example, Casey’s had a weak first quarter and then exceeded the standard 40 cents per gallon for three consecutive quarters. Management also says in-store demand won’t be destroyed until pump prices hit $5 a gallon, and with the national average price at $3.82, they say the company is right in the sweet spot. Price aside, shoppers value brand-conscious locations. Single-topping pizzas are $1-2 cheaper than your local pizza competitors, and you can have breakfast for less than $5. These are tough hurdles to overcome in 2026. Casey’s is also growing. The company plans to open 80 net new stores in 2026, with EBITDA expected to grow 8% to 10% annually. The goal was to achieve this type of growth in a sustainable manner through a combination of same-store sales, fuel profitability and operational efficiency. Here Josh talks about technicals… Risk Management Josh — What I like about this chart is that the exit is clearly defined in case the overall market overwhelms what is clearly a bull run for Casey’s. The main trend is still firmly up and this continues to act like a leader. The price is above the rising 50-day price of $647 and well above the 200-day price of $559, with the high-low structure remaining intact. The recent drop around $700 looks more like a recovery after a strong rally than actual damage, especially with the RSI resetting towards the low 50s. For traders, as long as the 50-day price holds at $647, it will hold that level and give it room to consolidate. Nothing has changed for investors, but this is still a solid compound above the 200-day $559, with a layer of support in the low $600s. A sustained controlled pullback from $600 to $620 is a healthy reset and could set the next leg higher, rather than implying a breakdown. Disclosure: (none) All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
