Dollarama Inc. (DOL.TO)

It has been such a winner. It is an 8 bagger for him. It has a visible growth profile through geographical expansion and in increasing their range of prices. Through strategic sourcing they can cut costs as well.

Has been a spectacular story. They keep coming through with very strong earnings. Multiples are fairly high, but you can’t argue with the earnings growth. It’s one of those names that if you own it, you are not selling it because you still see the earnings coming through. Even though the multiple has expanded, there are not many growth stories of this size in Canada that continue to be expectations.

(Market Call Minute.) Too expensive for her to buy right now.

This has been another one of those great stocks to own. It had been in a fairly predictable uptrend, and really started to move in the latter part of 2014. Has pulled back a little, which is probably healthy. He wouldn’t worry about it too much.

Still a lot of growth ahead for this company. Fantastic merchandisers. The way they are rolling out their product line and their price points, makes a lot of sense. This has done well because 1) they have delivered on earnings and 2) beaten expectations. Also, as money came out of resources, investors were looking for other areas, and there is a very narrow universe of stocks available. Feels that people are no longer going to be paying the 20, 25 multiple for companies that are growing at single digits, and this company may get caught up a little bit in that. If you own, he would consider Selling half your position, and come back to it on some weakness.

This is a component of the consumer discretionary group. Consumer discretionary has done well. He is worried about the sector, but this one is still an outperform.

He bought this at the 50 day moving average, which is the support level where he likes to buy stocks. They have 900 stores in Canada, which makes it 5X bigger than the next Canadian dollar store. They operate in a very attractive and growing segment of the retail space. There is still a lot of room for organic growth in Canada. Their plans are to go to 1400 stores. Yield of 0.51%.

The good thing is that the dollar store theme is not saturated yet in Canada. They are continuing to execute very well in their operations and opening new stores. Thinks there is still more upside through taking credit cards, better inventory management and better sourcing. Very high multiple, but if you own continue to hold.

This is a very, very strong situation. You might well speculate that eventually that this gets taken out. For the time being though, it will continue to expand.

A great company. It always appeared to be expensive, but the company kept executing quarter after quarter. Multiples have crept up to about 18 or 19 times earnings, so not a cheap stock, but there are so few good-quality retailers in Canada.

Dollarama (DOL-T) or Alimentation Couche-Tard (ATD.B-T)? The consumer sector has been one of the most resilient sectors in the US, and then there is Retail which looks very attractive. In retail, the lower cost providers are in the sweet spot like both of these companies. He would have no problem buying both of these. Great companies. Both pulled back in the last week or so, giving good entry points.

Still in growth mode. Trading on a trailing basis about 33X earnings, and on a forward basis at about 28X earnings. When you get into a phase where the market loves a story and loves the growth, there is no good way to value it. As some point, when that growth slows or ends, you are going to get a big multiple contraction. A stock like this doesn’t have terribly high margins, and when there is a growth issue, you are going to start trading at a market multiple, which right now would be at about 18X earnings. Technically, if it starts making lower lows and lower highs, that is when you know the multiple contraction is likely setting in. As long as it keeps having higher highs and higher lows, you can probably stay with it.

He was skeptical, but it has been successful. The stock chart tells you it has a good chance of going higher. If the consumer has any spending power left, he will do it here. Perhaps take some profits and wait for the next downturn.

He likes the positioning of this company, because there is not much of the same kind of business in Canada. They pretty much have a monopoly on the space. Not extremely expensive. Trading under 2X PEG ratio, but it is still at about 1.7. Not cheap, but deserves a premium valuation.

It just won’t quit. They increased their view of how much they can expand in terms of stores. It is defensive. He can’t get over the valuation but clearly it has been going up and still will.