With rates set to rise, the stage could be set for value stocks to outperform in the new year. In any case, investors should be ready for any volatility surges, as the U.S. Fed’s interest rate hikes and COVID variants of concern collide in what could be a tough combo for common stocks.

In this piece, we’ll have a closer look at two stocks that are less likely to trade in the shadow of the broader stock markets. Indeed, if volatility does pick up, and 2022 ends up being a less-rewarding year on the front of the returns, such value names can still help lead one to outperformance while taking, on average, slightly less volatility than your average stock.

Without further ado, consider the following value stock to buy in January 2022. The underrated name can help you fare better in a more challenging market environment whose trajectory still is uncertain after over a year without so much as a 10% correction.

Alimentation Couche-Tard: A top value stock that’s ridiculously profitable

Alimentation Couche-Tard (TSX:ATD) is the Canadian convenience store giant behind Circle K and Couche-Tard, the latter of which is a brand that’s only recognizable to those living in the province of Quebec.

The firm, which has a considerable presence in the U.S. and Europe, has grown its book by leaps and bounds over the years. Its M&A strategy has paid off big, as it scooped up rivals on the cheap, driving ample synergies in the process. The company used to be very active, loading up on opportunities large and small, while disposing of the odd asset to create value. Undoubtedly, the company has perfected the M&A model, with a disciplined focus on valuation and potential synergies. If the premium on a proposed deal isn’t much smaller than the potential synergies to be had, Couche will gladly take a raincheck.

Of late, the pace of acquisitions has slowed compared to years past. Still, the company has a very long growth runway. The global convenience store market is still highly fragmented. Most importantly, it’s due for disruption, with new technologies and EV charging stations that may become convenience store mainstays over the coming years.

Undoubtedly, many convenience stores will need to spend money to evolve to the new age. With many firms struggling with a tight budget amid the pandemic and numerous supply chain and shipping issues, such tech investments may be out of the question. Indeed, Couche-Tard will be opportunistically keeping an eye open on such firms that may be inclined to sell at a discounted multiple.

Couche-Tard is entering a new age of convenience retail. Some investors see EVs and new convenience store tech as disruptive to Couche, whereas others may view it as an opportunity for Couche to take its growth to the next level. At this juncture, I think Couche is one of the biggest value plays in Canada.

The bottom line

Could 2022 see the return of the value trade at the expense of growth? Nobody knows for sure. But with a name like Couche-Tard, you’ll receive both. The stock trades like a value play, but with a solid long-term growth plan, it’d be a mistake to discount earnings growth to be had over the next decade.

The post 1 Incredibly Profitable Value Stock to Buy for January 2022 appeared first on The Motley Fool Canada.

More reading

• 2 Top Growth Stocks to Watch in January
• 3 TSX Stocks to Buy Amid Omicron Fears
• 1 TSX Growth Stock That’s a Cheaper Way to Play the Rise of EVs
• My 2 Top Canadian Stock Picks for 2022
• 3 Passive-Income Stocks to Buy This Month

Fool contributor Joey Frenette owns Alimentation Couche-Tard Inc. The Motley Fool owns and recommends Alimentation Couche-Tard Inc.