Shares of Dollarama (TSX:DOL) are trading near their 52-week highs and are up around 270% in the past five years. With such incredible gains already amassed, investors may be wondering if the stock could be approaching a peak. But is it really too late to invest in Dollarama, or could it still soar higher?
The stock isn’t a cheap buy by any stretch, as it trades at 37 times its trailing earnings. That’s a steep premium for a discount retailer. But to its credit, Dollarama has been a growth machine. Back in December, the company reported comparable sales growth of 3.3% for the period ending Oct. 27, 2024, even as consumers scale back on spending. Meanwhile, the retailer is still aggressively pursuing growth, projecting that it will open between 60 to 70 net new stores during fiscal 2025.
While U.S. tariff risks are weighing down many Canadian stocks, Dollarama may do better should they come into effect. If Canadians spend more of their money in Canada as a result of tariffs, that could lead to a surge in sales for the discount retailer. The company reports its latest earnings numbers next month, and what the retailer says about its guidance could determine just how tariff-proof the stock may be.
Between its continued growth and potential to be a safe haven stock to hold amid economic uncertainty, Dollarama looks like a solid buy right now. Its valuation may look expensive today, but for long-term investors, there could still be some excellent gains made from buying the stock today and holding it for the long haul.
