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Dollarama has been a high growth company that trades at a premium valuation. At a P/E of around 30, the stock has already priced in their future Canadian expansion, as well as sales and margin expansion. If any of that doesn't work out, the stock could take a hit. I'm not sure what the "next" step is, once they hit ~1700-1800 Canadian stores.
 

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last time i was in they were selling kit-kat bars for 50 cents less than out main grocer, that got my attention ... the stores are clean, easy to navigate and well located and they recently started taking credit cards

in victoria we have a couple that are fairly close to each other so i think the issue of too many outlets isn't serious, the size of the stores should give them flexibility in finding locations that other similar stores can't use

the kinds of stuff they sell are getting expensive (inflation just announced at 3% today) and there is a cohort that will certainly make a point of going to stores that they know offer good values

i will stick around a while longer even though i have seen a pullback on my shares
 

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Why not? That should be expected as the norm when a momentum stock is priced for perfection. It is a healthy adjustment to unreasonable expectations.
yeah, why james ? ... DOL has been running hot for a long time and they are vulnerable to tariffs on many fronts ... the business still looks solid to me
 

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I think the sharp drop after a year of bad stock performance is a bad sign because it's a reflection of a generally bearish outlook on the stock. It shows investors and institutions lined up, already leaning towards dumping the stock, executing on their bearish views once it's confirmed -- causing that 18% single day drop.

DOL had a huge multi-year run, and in that phase the investors were bullish, leaning towards buying all the time. It's now possible the business environment and psychology has shifted 180. We might now be in a phase where investors are generally bearish and leaning towards selling all the time. If that's true, it could mean years of poor stock performance.

Fundamentals are one thing, investor mood and psychology is another. Both factor into the performance we see. I'm concerned that the investors and institutions are in a "selling mood" when it comes to DOL.
 

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buying opp here....?
I'm inclined to say no. Instead, I think it's time to earmark the stock for disposal, wait for the next rally to happen, and then dump into the strength. I'm sticking with my earlier forecast from the summer:

Unfortunately, DOL is looking increasingly bearish. It's now fallen below its 200 day moving average for the first time since 2016, so the two year rally might have ended. Currently around $47, if I had to guess, I'd say it's probably heading lower this year (but who knows). I still hold some.
 

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I'm inclined to say no. Instead, I think it's time to earmark the stock for disposal, wait for the next rally to happen, and then dump into the strength. I'm sticking with my earlier forecast from the summer:
I've held Dollarama for quite some time. It's return since 2010 is in the 1200% range and it's always been priced for perfection. I have certainly noticed that the expectations from analysts for a growth stock such as this is always at the high end. I feel the price ramped up a bit too much at the end of last year and the start of this year. A pull back should have been expected.

It's a well run company, and I'm always amused when I read articles regarding the analysts expectations. Today I read from Globe and Mail: "Despite the increased profit, the 43 cents per share of earnings was below the analyst estimate of 44 cents per share for the quarter, according to Thomson Reuters Eikon.
Additionally, sales grew to $868.5 million, up from about $812.5 million in the same quarter last year, but were about two per cent below the analyst estimate of $887.6 million.
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Huh, that doesn't sound like a quarterly report from a company that signals catastrophe, or as James suggests, a stock where it's "time to earmark the stock for disposal, wait for the next rally to happen, and then dump into the strength".. Really? So now you're a trader instead of a buy and hold?

I might use the pullback as a time to earmark an entry point, but I could be wrong, since I'm a long term buy and hold investor of high quality stocks. I have never been any good at trading.

ltr
 

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I think the sharp drop after a year of bad stock performance is a bad sign because it's a reflection of a generally bearish outlook on the stock. It shows investors and institutions lined up, already leaning towards dumping the stock, executing on their bearish views once it's confirmed -- causing that 18% single day drop.

DOL had a huge multi-year run, and in that phase the investors were bullish, leaning towards buying all the time. It's now possible the business environment and psychology has shifted 180. We might now be in a phase where investors are generally bearish and leaning towards selling all the time. If that's true, it could mean years of poor stock performance.

Fundamentals are one thing, investor mood and psychology is another. Both factor into the performance we see. I'm concerned that the investors and institutions are in a "selling mood" when it comes to DOL.
first, yeah sure, they were in a selling mood today, that's unarguable but this is a stock that has has a great run and though my gains have been pared i am still way up

referring to your argument in bold above, you are simply guessing here james, trying to predict the future, you maybe right and you may be wrong

but it seems to me a much more reliable way to decide whether to own a stock is by asking whether or not their business is sound and competitive

they are facing issues with minimum wage and with tariffs and investors have perhaps cooled as a result

but they still have a great product, clean, well run, well located stores that offer needed products at competitive prices and they have a highly loyal regular customer base, they are the standout in their field of dollar stores in canada

your notions strike me as highly abstract when you have a much simpler way to decide whether to buy or sell and that is the prospect of the product itself
 

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but it seems to me a much more reliable way to decide whether to own a stock is by asking whether or not their business is sound and competitive
they are facing issues with minimum wage and with tariffs and investors have perhaps cooled as a result but they still have a great product, clean, well run, well located stores that offer needed products at competitive prices and they have a highly loyal regular customer base, they are the standout in their field of dollar stores in canada
your notions strike me as highly abstract when you have a much simpler way to decide whether to buy or sell and that is the prospect of the product itself
BOOM! I also bought ATD.B, QSR and TOY for those exact same reasons. I buy companies and do not invest in the stock market. NO ETFs and NO Mutual Funds. Too many stocks and too many bad companies. I am looking to add more to my DOL holdings when the bleeding stops. Just me.
 

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Though I appreciate the 'investing on fundamentals' ideal, I'd say that's really idealistic. The stock market does not move on fundamentals except on perhaps 10+ year time frames. When we're talking about a few years time horizon, stock prices are more influenced by investor psychology/mood than corporate fundamentals (IMO).

Consider for example how bad "value investing" has done in the last 10 years, even for the professionals. Even if you correctly analyze a company and find good value, on fundamentals, it doesn't mean you're going to see good stock performance.
 

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Though I appreciate the 'investing on fundamentals' ideal, I'd say that's really idealistic. The stock market does not move on fundamentals except on perhaps 10+ year time frames. When we're talking about a few years time horizon, stock prices are more influenced by investor psychology/mood than corporate fundamentals (IMO).
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Interesting I always thought you were closer to fundamentals then investor psychology. Do you think the 5 pack traders closer to fundamentals or mood.

Also aren't you not invested in weed or to much tech?
 

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Interesting I always thought you were closer to fundamentals then investor psychology. Do you think the 5 pack traders closer to fundamentals or mood.
It mostly replicates XIU, so it's very similar to index investing... which isn't value investing, or based on fundamentals.

Also aren't you not invested in weed or to much tech?
I keep volatile sectors like these very low.
 

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Though I appreciate the 'investing on fundamentals' ideal, I'd say that's really idealistic. The stock market does not move on fundamentals except on perhaps 10+ year time frames. When we're talking about a few years time horizon, stock prices are more influenced by investor psychology/mood than corporate fundamentals (IMO).

Consider for example how bad "value investing" has done in the last 10 years, even for the professionals. Even if you correctly analyze a company and find good value, on fundamentals, it doesn't mean you're going to see good stock performance.
but you are making your argument based on the ability to back test

stock prices may well be influenced by investor psychology and finding a good company on "fundamentals" certainly doesn't mean you will get good performance but you only know this by looking backward and in retrospect and we can't do that

you can't backtest the future, the future is flat and anything is possible and we are compelled to invest in the future and only the future

with respect, you are throwing in your lot with the cnbc/bnn talking heads, the analysts and the newsletter writers, in other words the entire churning investment industry that makes its money off of investors, not companies

they play this game of constantly telling us that we need to anticipate this or that movement in the market, this or that cycle of investor sentiment and this keeps us investing re-investing, buying and selling in the belief that we can beat the market, but we can't

a better way is to buy companies for their superior products and services and stick with them until proven wrong ... and then sell, walk away and never look back

DOL has not been proven wrong, it is just out of favour with the soak-the-investor-investment-cabal, its still a good company ... it may not be the right company for you but it still is for me
 

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The long term growth expectations are claimed to be 13%, while the p/e is around 25, giving a PEG over 2, and some are unloading it at high volume. Doesn't look good. i would think that future Growth expectations would need to be double what they are to sustain this stock price.

It looks like what the market is saying is 'at this p/e level earnings better come in a lot higher than expectations or we're out of here.
 
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