This Stock, Up Over 230% in 5 Years, Looks Like a Genius Buy Right Now

A stock can more than double and still look tempting. That’s the strange thing about Dollarama (TSX:DOL). Shares are up more than 230% over the last five years, yet the business keeps giving investors reasons to stay interested. In a market where consumers remain cautious, food bills still feel heavy, and shoppers keep hunting for value, Dollarama stock looks built for the moment.

DOL

Dollarama’s model is beautifully simple. It sells low-priced everyday items across thousands of stores, with most products priced at $5 or less. Canadians go there for snacks, cleaning products, kitchen items, seasonal goods, school supplies, party items, and cheap household basics. It doesn’t need shoppers to feel rich. In many ways, it benefits when people feel stretched.

That makes the stock especially timely now. Inflation may not be racing the way it was a few years ago, but many households still feel squeezed. Rent, groceries, gas, debt payments, and family expenses keep pressure on budgets. Dollarama stock gives shoppers a way to trade down without feeling like they’re giving up much.

The dividend won’t excite income investors. Dollarama stock pays a quarterly dividend of $0.12 per share, so the yield is tiny at just 0.24%. But the payout still signals confidence, and the company has used cash flow to reward shareholders through buybacks as well. For long-term investors, the bigger appeal is capital growth, not income.

Performing well

The company’s latest quarter shows why. Fiscal first-quarter 2027 sales rose 21.4% to $1.9 billion. Canadian comparable-store sales climbed 5.6%. For a retailer that already operates at a huge scale, that kind of growth is impressive.

The company also keeps expanding. Dollarama ended the quarter with 1,719 stores in Canada, up from 1,638 a year earlier. It also gained a new growth platform in Australia through The Reject Shop, which contributed $192.8 million in sales during the quarter. Add Dollarcity in Latin America, and the story becomes more than just Canadian discount retail.

Profitability is another reason the stock keeps working. Dollarama isn’t just growing sales. It runs a tight operation with strong margins, steady traffic, and disciplined buying. Its stores are small, efficient, and easy for shoppers to understand. The business doesn’t need a complicated pitch.

Looking ahead

That global angle is one reason the stock still deserves attention after such a strong run. Dollarama stock has already proven its format in Canada. If management can export that discipline into other markets, the runway could stay longer than investors expect.

The risk is valuation. Dollarama stock doesn’t look cheap, trading at almost 39 times earnings at writing. A strong business can still deliver weaker returns if investors pay too much. Shares already trade near past highs, and expectations remain high. If sales growth slows, margins slip, or the international expansion disappoints, the stock could pull back.

There’s also consumer risk. Dollarama stock benefits from value-seeking shoppers, but it still sells discretionary items. If consumers cut even deeper, traffic may hold up while basket sizes weaken. Even so, Dollarama has earned its premium. This is one of the rare Canadian retailers with a long track record of growth, strong execution, and a brand that becomes more useful when shoppers feel under pressure. It doesn’t need a booming economy to win. It needs Canadians to keep looking for bargains.

Bottom line

That’s why the stock still looks like a smart buy, even after a massive five-year climb. Investors shouldn’t expect another easy 230% gain from here. The valuation is too rich for that kind of assumption. But for a long-term portfolio, Dollarama stock still checks a lot of boxes.

The post This Stock, Up Over 230% in 5 Years, Looks Like a Genius Buy Right Now appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.