Is Dollarama Stock a Buy After Posting Solid Earnings Numbers?




Unlike many dollar store chains south of the border, Canadian-based Dollarama (TSX:DOL) has been performing well of late. While some dollar stores are having a hard time generating growth due to challenging economic conditions, that hasn’t been the case for Dollarama, which reported comparable store sales growth of 4.7% in its most recent quarter.

Sales of just under $1.6 billion were up 7.4% year over year and the company also improved on its bottom line, with operating income of $422.9 million increasing by 15.3% when compared the prior-year period.

President and CEO Neil Rossy says that the company “generated strong results across the board” despite what many investors may have been expecting to be a tough quarter for the popular dollar store chain. In the days leading up to the release of earnings, Dollarama stock was sliding – likely due to concerns that the earnings report may not be all that strong.

After the release of the better-than-expected earnings, however, shares of Dollarama began to rally. The stock is trading near its 52-week high and is up more than 40% since the start of the year. Over a span of five years, the stock has rallied by around 180%.

It has arguably been one of the best Canadian growth stocks to buy and hold. While the stock may not be terribly cheap, trading at 35 times its trailing earnings, if you’re a long-term investor and are holding the stock in your tax-free savings account, this can make for an excellent investment to hang on to for the long haul.



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