Q: ATD has been stagnating lately and I am considering swapping some of it for Dollarama. Your opinion is appreciated. Joe
5i Research Answer:
ATD is slightly larger than DOL ($46B market cap vs. DOL at a $28B market cap), but DOL has stronger forward growth estimates, and given ATD's recent stagnant price action, its 10-year total return CAGR is lower than DOL's. ATD trades at a cheaper valuation (16.5X forward P/E vs. DOL at 34X), but we like DOL's business model and its ability to withstand different economic cycles. While we continue to like ATD, we would be comfortable with this switch for a long-term hold.