7-Eleven (NYSE:SE) reported solid fourth-quarter and full-year earnings results yesterday, and management mentioned a couple of things that could provide an upside boost for 2004 -- and beyond.

Getting some numbers out of the way: The world's largest convenience store chain saw operating earnings reverse from a $0.01 per-share loss to a $0.04 gain in the quarter, while revenue rose 9%, to $2.7 billion. Same-store sales increased for the 19th straight quarter, this time by 5.2%. Looking at all of 2003, earnings spiked 36% on a 10% revenue increase.

In yesterday's conference call (transcript courtesy of CCBN StreetEvents), CEO Jim Keyes mentioned two things that I think could juice earnings and same-store sales. The first is the grocery strike in California. While harmful to supermarket giants such as Kroger (NYSE:KR), Albertson's (NYSE:ABS), and Safeway (NYSE:SWY), it has been good to 7-Eleven, adding about 1% to its nationwide sales figures. (It's also helped mega-mega non-unionized Wal-Mart (NYSE:WMT).)

But the real hidden value may be all the new customers being exposed to the stores. Many will find that this isn't their father's 7-Eleven. "We've got a full-court press on trying to put our best foot forward with image and cleanliness, as well as our Fresh Food program and our pricing," says Keyes, "so that customers see 7-Eleven is a place they want to keep coming back to."

The second item is the surprising popularity of prepaid convenience cards. The company sold 95,000 of these in December, most presumably as gift cards. There's a total of $15 million loaded on all the outstanding cards and, aside from the obvious boost from all that cash, the cardholders have to keep coming back into the stores to use them. Many of the gift recipients may be new, lifetime customers. Finally, cardholders spend about $1 more, on average, than a cash-paying customer.

I don't know exactly how much upside potential these two items carry, but the tailwind they provide can only help.