By Teresa Rivas

Everyone knows to stock up on bread and milk before a snowstorm, but consumers have been just as eager to buy chocolate and breakfast sandwiches after they were done shoveling. The latter two items were standouts at convenience stores last month, which also saw traffic quickly bounce back after January's snow and ice.

C-store traffic was about 3% year over year in February, accelerating from the prior month when winter storms kept people indoors across much of the U.S., putting it about in-line with December trends, notes Jefferies analyst Scott Marks.

Consumers are being choosy with what they buy, but overall, most of the major food categories saw their sales improve over the last three months. Nonalcoholic beverages sales were up more than 3% from last February, while energy drinks were the clear standout, with sales up more than 8% over the past year.

C-stores are having a moment in the U.S., as big chains expand their fresh food and beverage service, buy up local operators, and generally hit the sweet spot between convenience and value for consumers. Casey's General Stores, which Barron's highlighted in early December, is up more than 16% year to date, a period when the S&P 500 has declined nearly 2%.

The most recent monthly data show consumers are still flocking to C-stores, which should continue to benefit the stocks. But the gasoline portion of the business is still meaningful, and the war in the Middle East looks likely to crimp fuel margins.

Gas prices at the pump soared last week, jumping between 30 and 35 cents on average, the fastest weekly increase since 2022, putting them at their highest level since 2024, notes Jefferies analyst Corey Tarlowe.

His data show fuel margins on average have fallen 2.6 cents week over week and are now trending down year-over year "underscoring that the recent cost surge has reversed much of the margin strength seen earlier in the cycle."

That leads him to be cautious heading ahead of upcoming earnings reports from Casey's and Circle K owner Alimentation Couche-Tard. He believes management teams will likely provide a conservative tone when it comes to fuel margins, even as both companies have otherwise been upbeat about their growing businesses.

In a worst-case scenario, gas prices would stabilize at high levels, Tarlowe believes. Recent spikes aside, C-stores generally benefit from volatility more than absolute prices because volatility gives them the chance to benefit from mismatches between wholesale and retail costs -- if fuel costs are moving around a lot, they can improve margins by quickly adjusting prices at the pump. But if oil prices stay high without moving around much, that advantage disappears and consumers try to limit fuel purchases.

By contrast, the best case scenario for C-stores' fuel margins would be a series of rising and falling fuel prices.

"In this setup, retail fuel prices tend to lag wholesale declines, allowing operators to temporarily expand margins as inventory is sold at higher posted prices while replacement costs fall," he writes. "This volatility--driven lag has historically been a key margin tailwind for the channel, especially for operators with strong pricing discipline and scale advantages."

Gas still makes up the majority of sales for convenience stores, so the concern about fuel margins is a real one. Nonetheless, it is worth noting there are still ways for C-stores to win.

Volatile fuel prices or a retreat from oil's recent spike would give them wiggle room, while revenue from inside-store sales, like snacks, freshly prepared food, and beverages continues to grow. It isn't time to pass by the stocks yet.

Write to Teresa Rivas at teresa.rivas@barrons.com

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March 09, 2026 15:33 ET (19:33 GMT)

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