Wondering where Dollarama (TSX:DOL) stock might be in two years? You’re not alone. As economic uncertainty rises, many investors are gravitating toward reliable companies with strong cash flow and a proven growth model. Dollarama stock has become a favourite in that category, delivering consistent results and outpacing expectations. With its stock near all-time highs, it’s a fair question: can the momentum continue, or is it already priced in?
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Recent performance
As of writing, Dollarama stock trades around $196 per share and has a market cap of about $54 billion. It’s up about 38% so far this year and more than 50% over the last 12 months. That’s well ahead of the TSX Composite, which has gained around 19% in the same period. The company continues to benefit from Canadians seeking out affordable everyday items, especially as inflation concerns remain high.
Its most recent earnings report for the first quarter of fiscal 2026 gave investors even more to cheer about. Sales rose 8.2% to $1.52 billion. Net income climbed to $273.8 million, up from $215.8 million a year earlier. Comparable store sales grew 4.9%, topping analyst expectations of 3.4%. Earnings per share (EPS) landed at $0.98, beating the $0.83 consensus. Gross margin also improved to 44.2%, up from 43.2% the year before. Those are all strong numbers, especially considering how many retailers are struggling with high costs and softening demand.
More to come
Looking ahead, the company expects to grow comparable store sales between 3% and 4% for the year and plans to open 70 to 80 new stores. That’s part of its long-standing strategy to gradually expand its footprint across Canada. But it’s not stopping there. Dollarama stock recently acquired The Reject Shop in Australia and has begun converting locations to its format. It’s also expanding its joint venture in Latin America, giving it more exposure to fast-growing emerging markets. While international expansion comes with risk, it could add significant long-term value if executed well.
What really sets Dollarama stock apart is its operational efficiency. Its gross margin of 46.8% in the previous quarter and 44.2% this quarter suggests that it’s doing an excellent job managing costs and supply chains. As prices stabilize across the broader economy, this margin strength could lead to even higher earnings growth. Add in strong free cash flow and a return on equity north of 200%, and it becomes clear why institutional investors are buying in.
Future in focus
So, where could the stock go over the next two years? That depends on how well it executes its expansion plans and whether it can maintain or improve margins. If the company continues to grow earnings by around 10% annually, which it has done in the past, and trades at a multiple of 26 times earnings, a fair estimate for 2027 could place the stock between $240 and $260. That’s about 20% to 30% above current levels.
Of course, no stock is without risk. If inflation cools significantly, the appeal of discount retailers might fade a little. If economic growth picks up, consumers could shift back toward mid-tier retailers. Also, integrating the Australian operations may be more complicated than expected. Any missteps could pressure margins or earnings growth.
Bottom line
Still, Dollarama stock has proven over and over that it can weather volatility and come out stronger. During COVID, it adjusted its store layouts and product mix. When shipping costs soared, it kept margins stable. When inflation rose, it passed some costs on without losing customers. It’s one of the few retailers in Canada with that kind of track record.
In two years, it’s reasonable to expect Dollarama stock to be larger, more international, and more profitable. While the share price may not double from here, it has every chance of delivering strong, steady returns. For long-term investors looking for stability and growth, this stock remains one of the top names on the TSX.
