I’m pretty confident that there will always be a healthy number of frugal people in this world. So last Friday, as some of you may already know, I purchased 15 shares of Dollarama Inc (DOL). Each share was purchased at $87.61 for a total investment amount of $1,324.
This is a dollar store chain with over 800 retail locations across Canada. The reason I decided to invest in this company is because I’m really impressed with how fast it’s expanding, and don’t want to miss out anymore on that growth. It’s also a recession proof company. There are frugal consumers when times are good, and there are even more of them when times are bad. So Dollarama has a very solid customer base that is not going anywhere. Here’s a look at how much profit Dollarama made in the last several years.
2010 – $73 million
2011 – $117 million
2012 – $173 million
2013 – $217 million
2014 – ??? (not released yet)
That looks like a pretty good track record of growing profitability to me 😉
The stock has been going sideways for the last 6 months or so but I think it’s about to start climbing again soon, which is why I decided to buy some now. The snow storms during last winter in Canada knocked out a lot of power for businesses in Ontario and Quebec which meant many Dollarama stores were out of commission during that period.
The company is announcing its latest earnings on April 9th later this week. A lot of analysts are expecting the earnings to underperform due to the extreme weather problems last quarter. This is why the stock isn’t higher today. Many investors believe the earnings will look bad. But I think this represents a good opportunity to use the current pessimism in the market to buy DOL shares at a relatively low price.
I agree with most analysts that Dollarama’s profits will be disappointing this time. But I also think the negative sentiment towards the stock is blown out of proportion. Once the earnings are made public on April 9th I expect the company will begin to outperform once again 😉 Who knows, maybe we’ll even get a dividend increase heh (^_^) So that’s why I want to get in before the company financials are released.
Will this new investment bring me closer to retirement one day or will my 15 DOL shares become dead money? I don’t know. We’ll see how other investors react to the earnings on April 9th. I believe Dollarama is a solid long term investment for me 🙂 It operates in a quasi monopoly much like Cineplex does. It’s sheer size and national reach gives Dollarama a great advantage over its smaller competitors 🙂 I plan to hold this company in my TFSA for at least 20+ years.
Buying Dollarama stocks is very straight forward if you already have a brokerage account. Simply create a new buy order and search for the ticker symbol DOL on the Toronto stock exchange, and choose how many shares you want to buy. More details here.
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