Q: I have been wanting to start a position in Dollarama, and it just seems to keep going up. With the TSX at an all-time high, would you start a position here? If not at what price is a good entry point?
5i Research Answer:
For a stock up 3,600% in the past 15 years it may not be a good exercise to try and get a perfect buy price. DOL will either keep doing its thing, or flame out. But we think its recent moves into international markets are quite positive, and it can simply repeat its North American success internationally. There are risks, of course, but the company has been very successful with prior acquisitions, and has out-managed its peers for some time. Its quality comes at a price, though: it is 41X earnings right now. Still, we would be comfortable starting a position, assuming at least a five-year timeframe.