Dollarama (TSX:DOL) is continuing to shine as one of the top-performing Canadian stocks in 2024, extending its impressive streak of outperforming the broader market for the sixth consecutive year. With a staggering 48% year-to-date gain, DOL stock currently trades at $141.67 per share, far outpacing the TSX Composite’s 18.6% rise. In recent years, the company’s strong fundamentals, growing footprint, and ability to attract consumers even in challenging economic conditions have helped it maintain consistent growth and reward investors handsomely. But where will Dollarama stock be in three years?
In this article, let’s explore Dollarama’s growth potential, key factors driving its performance, and what investors can expect over the next three years.
Strong earnings growth track record
Dollarama is known for consistently delivering strong earnings growth, and the recent financial results showed the continuation of this trend. The company reported a 5.7% YoY (year-over-year) increase in sales to $1.56 billion with the help of a 3.3% increase in its comparable store sales, reflecting sustained demand for its consumable products. However, a slight decrease in its average transaction size suggested that consumers are becoming cautious with spending amid economic pressures. Despite these challenges, Dollarama’s ability to cater to diverse income groups with affordable products keeps its customer base loyal.
With this, the Canadian discount retailer’s revenue has gone up 8.2% YoY over the last 12 months, which helped it achieve over 18% adjusted earnings growth. This consistent growth is one of the key reasons why Dollarama stock is continuing to outperform the broader market.
Focus on growth initiatives
Besides its impressive financial performance, Dollarama is continuing to focus on long-term growth initiatives to scale up its operations. The company recently updated its long-term Canadian store target, increasing it from 2,000 stores by 2031 to 2,200 stores by 2034. This aggressive expansion plan reflects Dollarama’s confidence in its business model and the growth potential of value-focused retail in Canada.
In addition, the company is also making investments to optimize its logistics operations. Notably, Dollarama plans to develop a new logistics hub in Calgary, Alberta, which is expected to be operational by 2027. This hub will complement its existing centralized distribution centre in Montreal and create a two-node logistics system that will improve efficiency and reduce costs.
What investors can expect in three years
Looking ahead, Dollarama’s strong financial growth trend is likely to continue as it focuses on store network expansion and improved logistics infrastructure. Also, its ability to attract budget-conscious consumers could help the company post steady earnings growth. We also shouldn’t forget that Dollarama’s ability to adapt and thrive in challenging economic environments makes it a very safe investment, especially for long-term investors.
Even if inflation persists and consumer spending remains cautious, Dollarama’s affordable product offerings could continue to draw budget-conscious shoppers. While predicting the exact stock price is nearly impossible, Dollarama’s strategic initiatives and proven track record suggest it has the potential to continue outperforming the market index by a big margin in the years to come.
