One of the clear winners during the last couple of years on the TSX today has to be Dollarama (TSX:DOL). This stock has had its trouble, but proven its worth again and again. The question is, without recurring revenue and inflation stabilizing, can Dollarama stock keep it up?
Today, let’s look at how much investors could have if they had invested $1,000 in Dollarama stock five years ago. And what’s more, whether Dollarama stock looks like it can continue to climb.
About Dollarama stock
Before we get into how much you could have, let’s look at what makes Dollarama stock so great any way. Dollarama is a Canadian retail chain that specializes in selling a variety of everyday consumer products at low prices. The company operates over 1,300 stores across Canada, offering a wide range of merchandise, including household items, party supplies, toys, stationery, food and snacks, health and beauty products, and seasonal items.
One of the key aspects of Dollarama’s business model is its focus on offering products at fixed price points, with the majority of items priced at $1 or less. However, in recent years, Dollarama has introduced higher-priced items, with some products priced at $1.25, $1.50, or even higher, in response to inflation and increasing costs, as well as offering higher quality, brand name options.
As well, despite facing competition from other discount retailers, Dollarama continues to thrive and expand its presence in the Canadian retail market. Its combination of affordable pricing, diverse product offerings, and convenient locations has made it a popular destination for budget-conscious shoppers across the country.
Earnings continue to grow
Dollarama has been around since 1992, and even so has managed to increase in size quarter after quarter. Yet the question is whether the company is keeping up the momentum. To answer this, let’s take a look at the last few quarters.
During the second quarter of 2024, Dollarama sales hit $1.5 billion, with diluted net earnings per share (EPS) hitting $0.86. Further, it opened 18 net new stores during the quarter.
The third quarter saw its sales increase to $1.5 billion, with diluted net EPS down slightly to $0.70. Furthermore, 16 net new stores opened during the quarter. Yet by the fourth quarter, there was a clear win.
The company reported $1.15 per diluted EPS during the quarter, with sales totalling $1.6 billion! This also led to a dividend increase of nearly 30%, with shares being pushed higher from the news.
Bottom line
So, if you had invested $1,000 five years ago, today you would hold a whopping $14,112.96. And that’s a humongous amount. But I doubt it’s over for Dollarama stock. The company has proven its worth time and again, with same-store sales growing considerably, and more net stores opening as well.
So with shares up, and the company now passing the three-digit mark, investors could be in for even more growth from Dollarama stock in the years to come.
