Is Dollarama Stock a Buy Right Now?

The question of whether Dollarama (TSX:DOL) stock is worth a buy is a question worth diving into. Here’s what investors should watch.

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The Canadian stock market primarily comprises three dominating sectors: finance, materials and energy stocks. The performance of these three sectors are influenced greatly by economic factors. However, outside of these sectors, there are plenty of other high-quality stocks investors are focusing in on. Dollarama (TSX:DOL) stock is one such top Canadian option that has been a long-term outperformer for many long-term investors. 

There’s a reason why Dollarama has been a Canadian retail stock that’s garnered significant attention over the years. Let’s dive into whether this company is worth a buy right now.

Dollarama about to release Q4 results 

Dollarama’s upcoming earnings call on Mar. 29 will shine additional light on whether this is the case. Or, at least, whether investors are proven right for investing in this national dollar store chain.

One of the key aspects of this upcoming earnings report investors will be watching is the degree of trade-down in the economy. Indeed, the extent to which Canadian consumers shift their shopping preferences toward lower-income options remains to be seen. Thus far, robust spending in higher-end goods remains. It’s still an economy where stimulus monies are being spent, creating what could be potentially fuzzy upcoming results for the retailer.

The company’s focus on reinvesting in its core business should manifest itself in higher top-line sales. That said, on the bottom line, it’s unclear how these investments will pay off.

Suffice it to say, we should get significant insight into how this stock is likely to perform in the coming quarters near the end of the month.

Outlook for Dollarama stock remains strong

Dollarama has shown exceptional growth over the past few years. The stock has grown by 22.42% over the past one year and 54.24% over the past five years. But DOL has been witnessing quite a bearish start in 2023. Analysts predict the stock to grow in the upcoming 12 months; this presents a good opportunity to retail investors to purchase the stock at a lower price.

DOL is currently trading at around the $77 level. Analysts predict an average price target of $90.58 in the next 12 months and $95 over the next year. That’s some significant upside that has yet to be priced in.

Bottom line

Operational since 2009, Dollarama is the largest dollar retail store for goods that are worth a dollar or less. It has a significant presence in Canada with over 1,000 retail stores. If you have a long-term investment objective and want to diversify your portfolio, Dollarama stock appears to be worth consideration right now. That is, if one believes where the analysts suggest this stock could be headed.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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