Valued at a market cap of $47 billion, Dollarama (TSX:DOL) stock went public in September 2009. In the last 16 years, the TSX stock has returned more than 5,000% to shareholders. This means that a $500 investment in Dollarama stock soon after its initial public offering would be worth over $26,000 today.
As past returns don’t matter much to current and future investors, let’s see if DOL stock can continue to deliver outsized returns in the next five years.
Is the TSX stock still a good buy?
Earlier this year, Dollarama unveiled plans to expand its international footprint by acquiring Australia’s largest discount retailer, The Reject Shop (TRS). It also reported robust fiscal fourth-quarter (Q4) 2025 (ended in January) results and provided ambitious domestic growth targets.
The all-cash transaction, valued at approximately $233 million (representing a 108% premium to TRS’s recent trading price), will establish Dollarama’s first presence in the Asia-Pacific region. Management identified Australia as an attractive market with significant growth potential, citing similarities to Canada in consumer behaviour and macroeconomic conditions while noting the discount segment remains underpenetrated with no major pure-play dollar store competitors.
Dollarama plans to gradually transform TRS’s business model over three to four years. Basically, Dollarama will begin implementing its proven retail strategy across merchandising, pricing, store layout, and logistics operations.
The company aims to expand TRS’s network from its current +390 stores to approximately 700 locations by 2034, establishing a new complementary growth platform for long-term value creation.
Meanwhile, Dollarama reported 4.9% same-store sales (SSS) growth in Q4 fiscal, bringing full-year SSS growth to 4.6%. The discount retailer expanded its Canadian store network to 1,616 locations and increased its long-term domestic target to 2,200 stores by 2034. For fiscal 2026, management expects to open 70-80 net new stores in Canada, above its historical pace of 60-70, due to opportunities to take over leases from existing retailers.
In Latin America, Dollarcity opened 100 net new stores in calendar 2024, bringing its total to 632 locations across Colombia, Peru, El Salvador, and Guatemala. It also announced plans to accelerate its entry into Mexico, with the first locations expected to open this summer.
Despite challenges from Canadian counter-tariffs on U.S. imports and economic uncertainty, Dollarama remains confident in its value proposition’s appeal to cost-conscious consumers. Management expects 3-4% same-store sales growth for fiscal 2026, with gross margins projected at 44.7% (at the midpoint estimate) due to cost pressures from tariffs, weaker Canadian dollar, and higher shipping rates.
What is the target price for Dollarama stock?
Analysts tracking Dollarama stock expect revenue to rise from $6.4 billion in fiscal 2025 to $9.77 billion in fiscal 2030. In this period, Dollarama is forecast to expand adjusted earnings from $4.16 per share to $7.4 per share.
A widening earnings base will also allow Dollarama to increase its dividends per share from $0.37 to $1.17 over the next five years.
Today, the TSX stock trades at a trailing price-to-earnings multiple of 41 times. If DOL stock is priced at 30 times trailing earnings, it will trade at around $225 in May 2030. This represents an upside potential of over 30% from current levels.
Given Dollarama’s lofty valuation and decelerating growth rates, it’s unlikely that the TSX stock will beat the market over the next five years.
