Q: I notice recently that Dollarama is often near the bottom of your "recommendation" list. I know its currently overvalued but its price has dropped significanly lately. Is there a reason why its near the bottom of your list, why its price is dropping, and at what price it would be a good "buy"?
5i Research Answer:
Please see this answer for the ranking explanation. It is rarely 'cheap' and is now 32X earnings, still at a premium. Its solid long term execution and market share have made it a favourite. Weakness since November is likely due to tariff and economic concerns. Some brokers have noted that future returns may be 'less robust' after many years of strong gains'. The last quarter was OK, but the company noted fiscal 2025 might see some deceleration in same store growth to 3.5% to 4.5%. We would still consider it a good, 'safe' stock, but would not expect 35% gains as we saw from it last year. We think below $130 makes it more interesting.