When headlines start warning about a slowdown, most investors get nervous and panic. But some of the most experienced Canadian investors do the opposite. They use the underlying market volatility to buy quality stocks at a discount.
Right now, one Toronto Stock Exchange name fits that description better than almost any other: Dollarama (TSX:DOL).
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Dollarama is a recession-resistant Canadian stock
Valued at a market cap of almost $50 billion, Dollarama is among the largest retail companies in Canada. The Canadian dividend stock has returned close to 500% over the last 10 years, comfortably outpacing broader market returns.
Dollarama tends to thrive during market downturns. Typically, customers tend to shop at “value” stores such as Dollarama and “trade down” amid a tepid job environment.
Dollarama sells everyday household basics, pantry items, seasonal goods, and simple health products at low, fixed price points. Given that roughly 80% of Canadians live within 10 kilometres of a store, Dollarama is easily accessible as it continues to expand its store count.
A strong performance in fiscal Q1
During Dollarama’s first-quarter fiscal 2027 earnings call on June 11, 2026, Chief Financial Officer Patrick Bui explained that gross margin improved to 45% of sales, up from 44.2% a year earlier, helped by lower logistics costs and the benefits of running a bigger, more efficient network.
Dollarama’s total sales for the quarter rose 21.4% to almost $1.9 billion, according to the earnings call. EBITDA (earnings before interest, tax, depreciation, and amortization), a measure of core operating profit, grew 17.4% to $583 million, indicating a margin of 31.6%.
The company opened 28 net new stores in Canada during the quarter, bringing its domestic total to 1,719 locations, and it remains on track to add 60-70 net new stores in fiscal 2027.
Dollarama’s Latin American business, Dollarcity, added 20 net new stores in the quarter and now runs 741 locations. Its contribution to Dollarama’s net earnings grew 27.1% to $51.2 million.
In Australia, Dollarama is slowly converting stores acquired through The Reject Shop into its own format, testing lower-priced imported products and renovated layouts. Management called the early customer response encouraging, though they were careful to note the sample size is still small.
Through it all, Dollarama kept rewarding shareholders. The company bought back nearly two million shares for $339.1 million during the quarter and approved a quarterly dividend of $0.12 per share.
Executives were candid that global pressures, including the ongoing conflict in the Middle East and rising costs tied to Chinese manufacturing, could weigh on margins later in the year.
Even so, President and CEO Neil Rossy struck a confident tone about the company’s ability to manage through it. As he told analysts on the call, “Our business model continues to provide flexibility and resilience to mitigate some of those pressures.”
This kind of confidence, backed by real margin improvement and consistent growth, is what long-term investors want to see heading into an uncertain economic stretch.
The Foolish bottom line
Dollarama is a stock worth owning during a recession given its business model, steady growth metrics and expanding profit margins.
With an expanding store count and a focus on international growth, Dollarama continues to return cash to shareholders via buybacks and dividends. In a nutshell, Dollarama is among the most dependable stocks on the TSX in July 2026.
