Dollarama (TSX:DOL) has earned its place as one of Canada’s most resilient and rewarding investments over the years. Its proven track record of growth, strong financial performance, and strategic approach to expansion have made it a standout choice for long-term investors. As the company continues to thrive, here are three detailed reasons why now is still an excellent time to buy Dollarama stock. All backed by recent earnings, historical performance, and a promising future outlook.
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The numbers
Dollarama stock’s financial performance speaks volumes about its ability to deliver value to shareholders consistently. In its latest earnings release for fiscal 2024, the company reported stellar results, with total sales increasing by 11.3% year over year to $1.64 billion for the fourth quarter. Comparable store sales were up by 8.7%, driven by higher transaction volumes and increased average basket sizes. For the entire fiscal year, sales rose by 16.1% to $5.87 billion, with comparable store sales climbing an impressive 12.8%. Such consistent sales growth, even during times of economic uncertainty, highlights Dollarama stock’s strong positioning as a go-to retailer for affordable goods.
Profitability is another cornerstone of Dollarama stock’s success. The company reported robust earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.86 billion for fiscal 2024, representing a 22.2% year-over-year increase and an impressive EBITDA margin of 31.7%. Operating income grew by 25.5% to reach $1.50 billion, with an equally strong operating margin of 25.5%. These figures underscore Dollarama stock’s efficient cost management and operational excellence, allowing it to maintain healthy margins while navigating rising input costs. The company’s ability to consistently improve its bottom line makes it a reliable choice for growth-oriented investors.
Dollarama stock’s resilience in meeting or exceeding financial guidance further cements its status as a must-buy stock. For fiscal 2024, the company not only achieved but surpassed its guidance across key performance metrics. Comparable store sales growth exceeded expectations, and earnings per share (EPS) increased by an impressive 29%. Plus, its financial outlook remains solid for the coming fiscal year. Dollarama’s history of delivering on its promises inspires confidence in its future performance, especially in a market where consistency is highly valued.
More to come
One of the most exciting aspects of Dollarama stock’s business model is its ongoing expansion strategy. The company added 65 new stores during fiscal 2024, bringing its total store count to 1,525 locations across Canada. This steady expansion reflects Dollarama stock’s ability to identify and capitalize on market opportunities, particularly in underserved areas. Its long-term goal of reaching 2,000 stores across Canada demonstrates a clear growth trajectory — thereby promising increased revenues and greater economies of scale.
From an investment standpoint, Dollarama stock’s performance has been equally impressive. Over the past year, its stock price has climbed significantly. This reflects a growing market capitalization that now exceeds $39 billion. Dollarama stock’s share price remains close to its 52-week high of $152.97, suggesting sustained investor confidence. The company’s beta of 0.54 indicates lower volatility compared to the broader market, making it an attractive option for risk-averse investors seeking steady returns.
The future outlook for Dollarama stock is equally promising, fuelled by several macroeconomic and industry trends. As inflation persists, more consumers are expected to seek affordable shopping options, driving foot traffic to discount retailers like Dollarama stock. Furthermore, its ongoing focus on operational efficiency and cost control will help it weather potential economic headwinds. All while continuing to deliver value to shareholders. Analysts also highlight the company’s strong dividend potential, with a forward annual dividend yield of 0.25% and a payout ratio of just 8.44%, indicating ample room for growth.
Bottom line
Dollarama stock’s strong financial performance, resilience in meeting guidance, and strategic growth initiatives make it a standout stock for long-term investors. Its ability to adapt to economic challenges, coupled with a robust expansion strategy and consistent shareholder returns, underscores its position as a must-buy. If you’re looking for a reliable investment with proven performance and a bright future, Dollarama stock remains a name to consider adding to your portfolio today.
