Wednesday, January 13, 2016

After a 20% Fall Dollarama Inc. DOL.TO Shares Are a Bargain

After shares of Dollarama Inc. (TSX:DOL) peaked at more than $90 each, I started to get bearish on the company.
There was still plenty to get excited about. Canada’s slowing economy is still a good thing for the company. Consumers tend to shop at lower-priced chains when times get rough, seeking the same goods at a better price. What’s priced lower than the dollar store?
Other retailers are getting hammered by the low Canadian dollar. Since Dollarama has much healthier margins than most, it’s been able to absorb some of this increase in costs. Expanding the company’s maximum price to $3 was a stroke of genius as well. Customers are willing to stomach a $0.50 increase in the price of an item, even if it is a 50% increase. In fact, most will barely notice. (more)

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