The Canadian stock market has been on a remarkable run, fueled by declining inflation, lower borrowing costs, and renewed optimism across sectors. As a result, the TSX Composite benchmark has surged by 25.6% over the last 12 months.
However, this rally doesn’t mean that risks have disappeared. Investors are still navigating economic uncertainties, from global geopolitical tensions to questions around long-term growth sustainability. In this environment, finding a stock that could provide both stability and consistent returns is more important than ever.
In my opinion, Dollarama (TSX:DOL) could be one of the safest TSX stocks for 2025 and beyond. Before I discuss why it’s not just safe but also a growth powerhouse for the years ahead, let’s take a closer look at what led to a selloff in DOL stock after its recently released quarterly earnings report.
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Why Dollarama stock dived after earnings event
In the third quarter (ended in October 2024) of its fiscal year 2025, Dollarama reported a 5.7% increase in its total revenue from a year ago to $1.6 billion. This improvement in revenue was mainly driven by a 3.3% YoY rise in its comparable store sales growth and positive contribution from new store openings.
On the profitability side, the Canadian discount retailer’s operating profit rose 5.4% YoY to $407.5 million. Overall, these results demonstrated Dollarama’s ability to navigate challenging economic conditions and maintain profitability even as consumers tightened their budgets. However, investors still appeared disappointed as the company’s adjusted quarterly earnings figure of $0.98 per share, which reflected a 6.5% YoY gain, missed Bay Street analysts’ expectations by a narrow margin.
In addition, it was the sixth consecutive quarter when Dollarama’s sales growth continued to slow. The company attributed this deceleration to a shift in consumer behaviour, with cautious spending patterns emerging in response to broader economic challenges. These could be the main reasons why this top TSX stock slipped by nearly 5% on December 4, despite reporting YoY improvements in its revenue as well as earnings.
But these factors still make it the safest stock for 2025 and beyond
It’s important to note that Dollarama stock has been a consistent performer since its listing on the Toronto Stock Exchange in 2009. With a market cap of $39.4 billion, its stock currently trades at $140.56 per share after rallying by 47.2% so far in 2024. Interestingly, this marks the 14th year out of the last 15 that DOL stock has delivered strong double-digit returns to investors.
Although its YoY sales growth rate has indeed slowed in the last few quarters, it’s important to note that the company is still continuing to post solid revenue and profit growth, even in a challenging economic environment. Its business model, focused on offering a wide range of affordable, everyday essentials, is inherently defensive.
Moreover, Dollarama’s ambitious expansion plans underline its confidence in future growth. The company recently increased its long-term Canadian store target from 2,000 locations by 2031 to 2,200 locations by 2034. This decision reflects management’s belief in the sustained demand for its low-cost, high-value offerings across Canada. Given all these factors, the recent decline could be an opportunity for long-term investors to buy Dollarama stock at a bargain, which could continue to be one of the safest stocks for 2025 and beyond.
