Would you continue to dollar cost average into Dollarama at $164+? Or do you think it's fully valued? The investing site I use for company historical data shows the current PE as 38.3 (high) and in between the 38.3 and 20.9 for the last 10 years. The forward PE for the next 2 years as 36.3 and 32.5. We've been slowly DCAing and it's worked out OK thus far. Thanks for stellar advice during these tumultuous times.
Sometimes it is tough to determine what is fair value for a high-quality stock like DOL, as its forward P/E has expanded from 16X in 2010 to 37X today. For example, an investor that felt it was fairly valued at 20X, would have missed out on both multiple expansion from 20X to 37X, but also earnings growth in this timeframe, leading to missed opportunity cost in share price appreciation. This multiple expansion has taken place over the years, and is reflective of investors' confidence in management, its ability to execute, and the company's industry-leading position. Margins have come up nicely over the years, it generates solid free cash flows, it has a good buyback policy in place (2.3% buyback yield) and forward sales and earnings estimates are good. It has seen a large run up in recent days following its earnings results, and we might expect some price consolidation in the coming days/weeks, but largely, with a high-quality name like DOL, we would be comfortable with a slow accumulation/DCA approach.