There’s no question that Dollarama (TSX:DOL) stock is one of the best long-term investments in Canada. In fact, it might even be the very best stock you can own.
Not only has it grown its revenue and earnings rapidly for over a decade, but it’s earned investors a total return of more than 610% over the last 10 years. That’s a compound annual growth rate of 21.7%.
And while many stocks typically see their growth potential slow the larger they get, Dollarama continues to find ways to expand its operations, even with its market cap now sitting above $38 billion.
So, with Dollarama now trading off its all-time high and below $140 per share, is now the ideal time for investors to gain exposure, or should you wait for the stock to pull back further?
Dollarama’s business model makes it one of the best long-term investments in the country
As I mentioned above, the growth Dollarama has achieved over the last decade is truly spectacular. For example, if you had invested $5,000 in Dollarama 10 years ago, your investment would be worth more than $35,500 today.
Aside from the numbers proving what an impressive stock Dollarama is, its business model makes it a no-brainer.
As a discount retailer offering consumers household staples and other essential products at lower prices than its big-box competitors, Dollarama has significant organic growth potential and can continue expanding regardless of market conditions.
This sets it apart from most other stocks. The majority of companies on the TSX thrive when the economy is growing but struggle when it slows down.
For Dollarama, however, an economic slowdown or any headwinds impacting consumers’ incomes can actually drive higher sales as shoppers look to save money on essentials in order to preserve their discretionary income.
For example, over the last few years, as inflation surged and interest rates climbed rapidly, Dollarama’s sales increased by more than 16% annually. For comparison, in the three years prior, it averaged revenue growth of 6.9% per year—still impressive but nowhere near the exceptional 16% growth it achieved in 2022 and 2023.
And now, with a potential trade war looming and the possibility of another major economic disruption on the horizon, Dollarama could once again see sales surge.
Plus, even once the economy recovers, consumer habits don’t simply revert. Shoppers who have adjusted to saving money on everyday essentials often continue those habits for the long term, which helps Dollarama stock sustain growth even after the economic climate improves.
Furthermore, beyond its organic growth from same-store sales increases, Dollarama continues to expand its footprint, opening between 60 and 70 new stores in Canada each year.
However, it’s not stopping there. Eventually, its growth potential in Canada will slow down, so Dollarama is already looking to the future by investing in the Latin American dollar store chain, Dollarcity.
Dollarama is one of the best stocks to buy while it trades below $140
Because Dollarama is one of the best stocks on the TSX and continues to grow rapidly, it’s essential to take advantage of any discount before the stock inevitably recovers.
The best companies on the market typically trade at a premium for their growth potential. So, while Dollarama’s share price will fluctuate like any other stock, it rarely gets significantly cheap. Therefore, if you’re waiting for a major pullback, it may never materialize.
For example, even with the economy projected to recover over the next few years, Dollarama is still expected to grow both its revenue and earnings at an impressive rate.
In fact, over the next two years, analysts estimate its revenue will increase by more than 6% annually on average. More importantly, though, its normalized earnings per share are projected to rise at an average of 11.75% per year as its margins continue to improve.
Therefore, while Dollarama stock trades off its highs and below $140 per share, it’s undoubtedly one of the best Canadian stocks to buy now and hold for years to come.