Dollarama: a FCF machine

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CDN Stocks

Dollarama (TSX: DOL), while quite expensive at 26.9x forward earnings, is still undeniably a fantastic Canadian company. Most critics continue to get Dollarama wrong, whom tend to point at it’s (admittedly) lofty valuation. However, with it’s FCF growth track record, its hard to justify not owning this nice little business. Further, (1) it is in a market sweet spot that is somewhat insulated from the “Amazon effect” and (2) it should be able to continue to raise its prices over time on its price inelastic product offering. I own this one for the long-term and will continue to hold. Over time I expect Dollarama’s growth to curtail and the focus to transition to returning cash to shareholders via growing dividends and buy-backs. Buy and Hold!

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