Since its spinoff from Murphy Oil in 2013, Murphy USA (NYSE: MUSA) has achieved an impressive 1000% overall profit, significantly outperforming the S&P 500 index. This exceptional growth can be attributed to strategic actions, including a substantial buyback of over 55% of its outstanding shares. For investors who favor a buy-and-hold strategy, Murphy USA presents an attractive opportunity.
Expansion and Reach: A Southern Stronghold
Murphy USA operates 1,733 stores, primarily in the southern and southeastern United States. Serving over 2 million customers daily, the company’s close partnership with Walmart has facilitated its expansion. Most Murphy USA stores are conveniently located near Walmart outlets, contributing to its growth as the fourth-largest convenience store chain in the U.S.
Commitment to Low Prices: A Winning Strategy
Murphy USA champions a “everyday low prices” business model, which is particularly appealing in a market where 63% of consumers live paycheck to paycheck. This focus on value has driven the success of the Murphy Drive Rewards loyalty program, which has rapidly grown to 8 million members since its launch in 2019.
Future Growth Plans: Steady Expansion
Murphy USA plans to increase its store count by 45-50 stores (approximately 3%) annually until 2028. This expansion strategy aims to bring the company’s affordable model to new markets. The wide geographical opportunities for new store openings, combined with competitive pricing, position Murphy USA favorably against other 24-hour convenience stores.
Fuel Margins and Sales: Strong Financial Performance
Despite its focus on low prices, Murphy USA’s fuel margin has exceeded $0.30 per gallon over the past two years. The company sells around 5 billion gallons of fuel annually, and its profitability is further bolstered by merchandise sales, which account for 25% of total sales. This robust financial performance generates significant cash flow, enabling the company to fund its growth plans easily.
Shareholder Rewards: Consistent Buybacks
Murphy USA consistently rewards its shareholders through stock buybacks, thanks to its substantial free cash flow (FCF) after capital expenditures. This strategic reinvestment in the company not only underscores its financial health but also enhances shareholder value.
Promising Future for Murphy USA
The impressive growth of Murphy USA’s stock is expected to continue, with projections of 30-40% growth in the coming years. Investors can be confident in the company’s ability to maintain its upward trajectory, driven by its strategic expansion, solid financial performance, and commitment to shareholder returns.
