Dollarama Inc. (DOL.TO)

0.4% dividend. It has been a growth play in Canada. We will have difficult economic times and this one is much more defensive.

Would you average up? He loves this company. It has a pretty high PE ratio, so if they should disappoint on their earnings as some point, you could see a pretty good correction. Have been delivering on the results and have done a wonderful job. He would hesitate to average up at this point.

It keeps going. The consensus is that there is 2-4 years of growth left. You can own it for a while longer.

Historically, this stock does very well when you get close to Christmas. Chart shows that the stock is in a distinct upward trend. The key is to watch the technicals.

A high momentum name. The problem with high momentum is that when it starts to weaken the company is very susceptible to any bad news. You need good news to keep driving higher, higher and higher. He would be careful with a high momentum name.

Had a super run, but looks sort of expensive at these levels. Has done quite well in terms of expanding its stores, but thinks it is going to find it’s time for a rest. The stock had a niche and it has filled it fairly effectively, and he is not sure there are a lot of other locations they can find that will give it the same kind of lift that they had with the 1^st run around.

They run a terrific business. They successfully took their customer up the value chain and he doesn’t see why they can’t take people further. It has not come off very much. As a long term hold he is in favour of it.

He likes this and has been buying it recently. Their most recent quarterly result was really impressive. This is a great, long term, steady Eddie stock. ROE is in the 30s.

He would call it a soft hold or a sell. The field is going to get a little more competitive. Their valuation comes partly from money moving out of energy and now it is moving back into it. He thinks the valuation is a little excessive. If you sit and wait long enough, it will grow into its valuation.

He continues to look at it but they are not a big dividend payer. They are growing it, but they really want to grow their business. He would buy it. Their growth rate is 25% so a P/E of 31 is warranted.

He regrets not owning it. They have executed very well. He always felt it was expensive and that is why he does not own it. If Canada is in a zero growth mode, he assumes people are shopping for bargains. If they were to miss earnings, you always have to look at why. It could create a better opportunity to buy in.

When a stock multiple gets really high, it doesn’t mean it isn’t a good stock, but he doesn’t like it as much. At 30-35 times earnings, if they stop executing then it will trade back to half that multiple. Nobody knows when that business plan comes to an end.

Normally you have to have about 20 years of data to do a seasonal trade. However, technically, this is one of the better stocks on the TSE. It is clearly on an upward trend. During the period of weakness for the TSE Composite, it has been outperforming the market and is still trading above its 20 day moving average. Short-term momentum indicators are still fairly positive. It still looks very good

This is a stock that will do just fine, even in a slower Canadian economy. Management has shown itself to be very sure footed. They have niche that they haven’t filled completely. His main concern was that a US company would come marching in and knock them out. The environment is quite positive for this type of company.

Canadian Tire (CTC.A-T) or Dollarama (DOL-T)? Both companies have some headwinds. If he had to pick, it would be Canadian Tire. Longer-term they have shown tremendous adaptability. The headwind from a weak Cdn$ makes imported products for the stores more expensive, but thinks it will affect this one more.