Dollarama Inc. (DOL.TO)

The company is expanding, but it is hard for a discount company to raise prices aggressively. This has been a wonderful stock. He doesn’t see what the catalyst is going to be going forward for the next 12 months.

(A Top Pick July 4/16. Up 10.67%.) Has a long runway, but is limited in terms of the number of stores they can open in Canada. They have about 1,000 now, and management has suggested 1,400 will be the saturation point, although they are also increasing same store sales. Shares have been trading sideways for a couple of months, while operationally they have been knocking it out of the park. At some point he expects there is going to be some catch-up.

He likes this franchise a lot. Very unique in Canada. It has a major advantage over any other dollar store franchise. He took profits on his holdings. The stock has been really meandering sideways for some time. This is because it is trading at 27-28 times trailing and forward earnings. Not cheap. Management is doing a very, very good job. They are planning on opening 60-70 stores this year. The valuation still holds him back from wanted to own this.

This has been consistently earning a 40% return on invested capital for 8 years or longer. The valuation looks very reasonable. It has had a great run over the last couple of years, so you should be a little careful.

Technically there is nothing he can say to Sell it, with the exception of common sense. The run is too big unless it is going to split. He likes the sector. This one is very, very rich.

As a value investor, this is not one that would come up on his radar. As a growth stock, it has done very well, and thinks it will continue to do so. For the long-term, it will probably do you well.

(Market Call Minute.) This is not one for him. Too expensive on valuation. Insiders dumped a big share today.

This is kind of a supreme sector, where modest goods have gone from $1 to $5 now. This is where everybody shops, whether they are rich or poor. The company is brilliantly run. Expect this stock will continue to be strong.

He has not heard anything on a stock split. It is well managed and priced to perfection but they have always managed it to perfection. If there was ever a disappointment on the growth or earnings side, it would devastate the stock price. Make sure price increases are translating to the bottom line. They are showing real organic price, but he is not sure if they are worth the price.

Very good operators and there is still a lot of room to grow their footprint in Canada. They’ve gone from $1 to $1-$4 now, in order to provide a higher price point and better quality goods. If they continue to execute, they are going to be just fine for the next couple of years.

A great growth story in Canada over many, many years. He is not attracted to it because of valuations. The question is how much more can they continue to expand. Also, they may suffer a little in this environment where investors rotate out of these types of names. Not a bad company, just a little expensive for his liking.

A lot of the consumer staple/discretionaries are really good companies, and have gotten a little bit rich. He likes this and he likes the sector. ROC is 41%, which is really good. Valuation is still very reasonable and would be his kind of company.

The chart shows it is starting to break down a little. Broke below the 50 day and 100 day moving average, which is a bit of a warning sign. Hasn’t quite broke below the 200-day moving average. A great growth rate of about 16%, but trading at 25X forward earnings. Wait for this to come down a little when valuations are a bit better.

It is too expensive and they keep defying the odds. They are doing a great job of execution. It is priced for perfection. Just hold it. If growth slowed or margins got narrower, then get out.

Has owned this in the past. It is screening really well both fundamentally and technically. He is waiting for an opportunity to see if it pulls back. (See Top Picks.)