This year for Dollarama was not good at the stock market. Its returns were found to be significantly much lower than average. The poor performance of Dollarma has only opened up avenues for value investors, who were of the belief that the DOL is currently undervalued.
Reasons for the company to rebound in 2019
- Excellent financial results: The financial results of the company were not that bad. It was in December that the Q3 reports were released. The 39-week performance ended on 28th October 2018. When compared to the previous fiscal year, it favored well. It also witnessed an increase in gross profits, net earnings, and sales by approximately 5%, 6% & 6% respectively. Dollarama earnings per share are said to have increased by about 10%. Initial 2018 three quarters saw opening up of new 57 stores when compared to 55 in previous year’s similar time period. DOL’s slowing growth has been pointed out by some analysts. However, it has been able to meet its opening goals in 2018 that stands between 60 & 70 stores.
- International growth: Since its IPO launch in 20019, it has been quite successful in the stock market. This is partly because of the exponential growth with regards to the store numbers that it owns. During that time, it had somewhere around 580+ stores. Presently, it has over 1,190 stores. In just under 10 years, it has managed to double its store numbers operating throughout the length and breadth of Canada. Although sufficient room exists for domestic growth, currently it is planning to replicate its success abroad, significantly in Latin America. It had an agreement in 2014 with Dollar city, a Central American Dollar store-chain to supply merchandise, provide valuable advice on business matters and product assortment expertise. It has plans for expansions throughout South and Central America with its vast expertise and experience and the strategy has been working well. In Guatemala and El Salvador, it had 15 stores, while the number increased to 77 stores. 9 stores have been opened in Columbia. In 2020, it is likely to have the option to purchase Dollar City’s majority stake, thus expanding own operations into such a promising territory. If domestic growth in Latin America is to be replicated, then the company’s future definitely appears bright.
This company has managed to shed around 50% of market value in the last 6 months, even though it has displayed strong growth prospects and posted solid financial results. The market experts are of the strong belief that this company is sure to rebound very fast from its current slump this coming new financial year 2019-20. Therefore, the experts do suggest potential and current investors of Dollarama buy shares of this popular dollar store chain and follow the old adage, which is to buy low and sell high to make huge profits.
The above reasons are more than enough for potential investors to consider investing their hard earned money in this company without having to worry about anything.
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