The S&P/TSX Composite Index climbed 111 points on March 18. The TSX has shot up 13.4% in 2019 so far and is now up 7.5% year over year. Financials, cannabis, energy, and even materials have benefited from this tremendous rally. However, other big caps have not fared as well.
Dollarama is the largest dollar store retailer in Canada. The Montreal-based company has seen its stock rise 6.5% in 2019 so far. However, shares are down 31.9% year over year. After nearly a decade of dominance and fantastic earnings, Dollarama appeared to hit a wall in early 2018.
Dollarama is expected to release its fiscal 2019 fourth-quarter and full-year results later this month. In its previous earnings release, the company saw sales increase 6.6% year over year to $864.3 million. Diluted net earnings per share posted 7.9% growth from the prior year to $0.41.
Unfortunately, Dollarama stock tumbled, as it failed to meet the lofty expectations of analysts. The earnings release also came during a turbulent period for the stock market. The post-earnings drop sunk Dollarama stock to a 52-week low. It has since recovered but remains at the low end of that range.
Weak retail sales in Canada are a concern going forward, but dollar stores have managed to buck the broader trends since the financial crisis. As it stands right now, Dollarama has an RSI of 40, which puts it closer to neutral territory than being oversold. Value investors may want to take the gamble on a stock that looks like a discount in late March.
Cineplex operates chains of movie theatres across Canada. Shares of Cineplex have dropped 4% in 2019 so far. The stock is down 21.7% year over year.
In late February, I’d warned investors about the poor North American box office performance. Theatre attendance saw some of its worst numbers to begin the year in more than a decade. However, as I’d mentioned in the article, help appears to be on the way. The first jolt came in the form of Captain Marvel, which has raked in over $260 million in the domestic box office so far. As of this writing, the film looks poised to crack $1 billion worldwide.
Cineplex investors and moviegoers have more to look forward to in the spring. Some of these include Avengers: Endgame, which is certain to be a massive hit, Dumbo, and the Hellboy reboot. The summer has the potential to be even bigger with Toy Story 4, The Lion King live action remake, and Spider-Man: Far From Home on tap. This should be a huge boost to revenues in the final three quarters of 2019. The fall and early winter releases also hold big promise.
Right now, Cineplex has an RSI of 36, which puts it just outside oversold territory. The stock offers a monthly dividend of $0.145 per share, which represents a highly attractive 7.1% yield. Cineplex looks like a fantastic bargain for value and income investors in late March.
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.