Dollarama Inc. and National Bank Stocks Are at or Near 2018 Lows: Is it Time to Buy?

Dollarama Inc. (TSX:DOL) and National Bank of Canada (TSX:NA) have slumped in 2018 but could come at great value today.

| More on:

The S&P/TSX Composite Index rose 52 points on April 17 to extend its winning streak to four straight trading days, though gains have been relatively modest. Energy stocks once again provided a boon for the index, in addition to momentum in the tech sector. This comes ahead of the Bank of Canada’s interest rate decision, which will be held today.

Today, we will look at two top TSX stocks that have suffered with the broader index so far in 2018. Both sit at or near lows for the year. Is it time to buy?

Dollarama Inc. (TSX:DOL)

Dollarama is a Montreal-based company that operates dollar stores across Canada. It is currently the largest dollar store retailer in the country. Shares of Dollarama have dropped 4.9% in 2018 as of close on April 17. The stock is still up 26.7% year over year. Dollarama released its 2017 fourth-quarter results on March 29.

In the fourth quarter, EBITDA increased 12.2% year over year to $253.8 million, and comparable store sales grew 5.5%. Dollarama also opened 25 net new stores in Q4. For the full year, Dollarama saw sales jump 10.2% to $3.26 billion and EBITDA climb 17.5% to $826.1 million. The company plans to open net 60-70 new stores in 2019. The decision to accept credit purchases in the middle of 2017 has driven positive results at stores thus far and is expected to continue into this fiscal year.

Dollar stores in North America have not only come out of the so-called retail apocalypse unfazed, but they’re in a stronger position than ever. In addition to its impressive growth this decade, Dollarama also offers a modest dividend of $0.12 per share. Investors betting on a resurgence in the TSX should look to Dollarama to challenge its 2018 highs in the spring and summer months.

National Bank of Canada (TSX:NA)

National Bank is the sixth-largest major bank in Canada. The Montreal-based bank has seen its shares fall 5.5% in 2018 so far. It is worth revisiting Canadian banks as the next round of earnings loom.

In the first quarter of 2018, National Bank saw net income in its personal and commercial banking segment rise 11% to $230 million. Broader economic conditions have complicated investor outlook for Canada’s major banks. The Canadian housing market has cooled down significantly to start 2018, as was expected when new OSFI mortgage rules were introduced. Industry experts are concerned that further rate tightening could delay a rally in the market, but this could also improve margins for lenders.

However, hiring has remained strong, and a report released in early April showed that Canada created 32,000 jobs in March. GDP shrank 0.1% in January, but Canada is still expected to be one of the leaders in growth in the G7 this year.

National Bank also offers a $0.60 dividend payout, representing a 4% dividend yield. Financials have suffered on the TSX but are entering oversold territory. National Bank offers enticing value ahead of its second-quarter results.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Investing

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

edit Sale sign, value, discount
Stocks for Beginners

These 3 Growth Stocks Are on Sale and Set to Surge

Some growth stocks are on sale right now that offer massive long-term potential for investors. Here's a trio to consider…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »