Dollarama Stock Is up 18% This Year! Is it a Good Buy Today?

Dollarama (TSX:DOL) stock has grown 18% in 2023 alone but has so much more to give investors who are willing to buy now.

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Dollarama (TSX:DOL) continues to be one of the big winners of 2023. Shares have surged for the retail stock, seeing it rise 18% just in 2023 alone. And yet this has been through a very rough time on the TSX today. So, let’s look at why Dollarama stock has done so well, and if it should continue for investors.

Times of trouble

There have been a few times of trouble dealt with by Dollarama stock in the last few years. The pandemic alone could have been disastrous, and, of course, it was not good for the company. However, it managed to keep its doors open thanks to being an essential service provider.

From there, we went through a drop in the market since 2021, when interest rates and inflation started to rise. Again, this could have been rough. However, Dollarama stock has kept costs low for as long as possible. It tends to be the last stock to increase its prices, roping in customers before it raises those prices later.

As Canadians continue to look at ways to save money in expensive times, Dollarama stock remains strong. Shares, as mentioned, are up 18% in the last year and are not slowing down, especially as it continues to expand.

Expand how?

Dollarama stock has been expanding in a few ways during the last five years. One of those ways is pretty obvious, and that’s opening new locations. Dollarama continues to open locations across the country, which, of course, has certainly helped keep its sales coming in.

But there are other methods of growth as well. One is through the successful purchase of Dollarcity in Latin America. Using its already proven method of keeping costs low and expanding as many locations as it can, the company has been quite successful — so much so there are rumours it could purchase another low-cost retailer in Australia.

Finally, there is the method of bringing in more brand names. Whether it’s Betty Crocker or Paw Patrol!, there are more and more recognizable brands for Canadians to pick up. This has certainly helped Dollarama stock not only bring in customers but also keep them.

Could it hit $100?

The thing is, Dollarama stock has been growing but has yet to hit the $100 mark. That could certainly happen after the next earnings quarter. That quarter will include sales from the holidays, which again should be strong from low-cost purchasing by Canadians.

So, while shares are up 18%, and it trades at 31.84 times earnings, Dollarama stock is still a great option. Shares have flattened as news that interest rates and inflation are under control. But it will always remain a strong stock to consider in times of trouble.

In fact, should Dollarama stock continue to grow its locations, expand into Australia, and bring in more brand awareness, that alone could see massive share growth. From there, Dollarama has the means to become a global phenomenon that you’ll wish you’d picked up at under $100 per share.

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 Amy Legate-Wolfe 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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