Dollarama (TSX:DOL) stock has made a habit of making the “boring” look brilliant. Over the past five years, Dollarama stock returned about 260%, and the past year still came out ahead of the TSX with shares up 31% at writing. However, Dollarama stock is now down about 10% year to date, which feels like a breather after a big run, not a breakdown. The bigger point stays the same: when life feels pricey, Canadians trade down, and Dollarama catches the traffic. In 2026, the question shifts from “Can it win?” to “Can it win enough to justify the price?”
Buy
I’ll start with the buy case. Dollarama stock runs discount stores that sell consumables, household basics, and seasonal items with a tight cost structure. In its fiscal 2026 third quarter (Q3), it grew sales 22.2% to $1.9 billion, while Canadian comparable sales rose 6%. Net earnings climbed 16.6% to $321.7 million, and diluted earnings per share (EPS) rose 19.4% to $1.17, which tells you the business still grows faster than the economy.
The buy case also leans on guidance and side engines. Management raised fiscal 2026 Canadian comparable sales guidance to 4.2% to 4.7% and raised Canadian gross margin guidance to 45% to 45.5%. It also kept its plan for 70 to 80 net new store openings in Canada. Dollarcity helped too, with Dollarama’s share of net earnings at $42.4 million in the quarter. The valuation looks rich, trading at 40 times earnings, but the market often pays up for consistency, and Dollarama stock has earned that label so far.
Sell
Now for the sell case. A premium multiple demands premium execution, and even a small wobble can hit hard. In the same quarter, gross margin only edged to 44.8% from 44.7%, and earnings before interest, taxes, depreciation, and amortization (EBITDA) margin slipped to 32.1% from 32.6%. Selling, general, and administrative (SG&A) also rose to 15.4% of sales from 14.3%. If Canadian comps cool while wage, rent, or shrink pressure builds, the market can quickly reset what it will pay for each dollar of earnings.
Australia adds another reason to sell if you want clean, predictable results. Dollarama stock completed its acquisition of The Reject Shop in July 2025, and Australia dragged on results right away, including a $0.03 hit to diluted EPS in Q3. Management also said it does not expect Australia to contribute positively to overall profitability in the near term, including fiscal 2027. Net financing costs climbed to $49 million from $41.6 million, which reduces flexibility if the economy weakens. If you expect a simple Canada compounding story, this rollout adds years of execution risk before it pays off.
Hold
The hold case suits investors who want quality but refuse to chase. Dollarama stock still runs a resilient Canadian engine, and the Q3 numbers showed momentum. It repurchased about 2.61 million shares for $484.6 million at a weighted average price of $185.96, and it declared a quarterly dividend of $0.1058 per share. Those actions can support per-share growth, even if the stock trades sideways for a while.
At the same time, a hold stance respects valuation and the new moving parts. When the market assigns a forward multiple in the low 30s, you do not get much room for disappointment, and the dividend yield stays tiny, so income investors get little cushioning. If you already own it, hold through 2026 and watch three signals: Canadian comps versus the 4.2% to 4.7% target, Canadian gross margin versus the 45% to 45.5% target, and progress in Australia without draining focus or profits. If you don’t own it, waiting for a pullback can improve your odds over the long run.
Bottom line
My bottom line is to hold for 2026. Dollarama stock keeps delivering, and the raised guidance backs that up, but the stock already prices in plenty of strength. Owners can stay put and let the business compound. New buyers should stay disciplined and look for a better entry point, as even great businesses can punish investors who pay too much.
