Dollarama Inc. (DOL.TO)

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.

It is a great company and if you can buy it on a dip you will be well served. It is defensive and the business cycle is turning up. Things are looking better states side. You will be fine if you get it on a dip. Dollar Tree might want to buy them to get a large Canadian footprint but he does not buy things because he thinks their MAY be an acquisition. Prefers cyclical names.

She is always looking at it and has missed it. It is always too expensive to buy. They have a dominant position in Canada. They have the first mover advantage. On a pullback she would add to it (5-10%).

This is a true organic growth story, not an acquisition rollup story. They are really dominating the $1 space in Canada. A high-quality business that has a lot of room for further growth. Doesn’t see a lot of upside at this level. He would rather get it at 15%-20% lower from here.

They are very good at their organic growth. They are defensive and cyclical at the same time. People still shop there when things are improving. One of the issues is that they source a lot of their product from the US so the currency issue may affect them.

(A Top Pick Jan 16/14. Up 40.67%.) They have about 920 stores. Have the ability to grow in a number of ways including adding 60 to 80 new stores, same-store sales growth and increasing price points here and there. A little bit of yield as well.

This has been a fabulous story since it IPO’d a couple of years ago. The technical analysts’ favourite phrase is “the trend is your friend”, and the chart on this one shows a pretty impressive upward trend. There is no indication that this stock is showing signs of reaching a high. We are actually going into a period of seasonal strength for this, into the spring time.

He has a hard time telling you to “buy it” in here. It is going to be a beneficiary of a lower oil prices where people take their excess money and spend it in places like this. Money has moved from the resource sector and into the growth sector moving evaluations to all-time highs.

One of the huge winners since it went public. This is way too much value for him. It just had a stock split and is trading at EBV +7, which is really, really high for him. There is better value elsewhere.

He never pays retail prices, and this company’s valuations are retail prices. 25 times for this year’s earnings is insane. Either he’s wrong and the company grows into its multiples or he is right and the company is worth only 15X earnings. Doesn’t see any moat here. He sees a company that was 1^st to market and had taken advantage of an arbitrage opportunity. Doesn’t understand why the US guys haven’t come in and slaughtered this company.

Has been a tremendous growth story. Well-run. The company has done an excellent job of increasing the average selling price for their product in the store. There is still a lot of running room from a space perspective. Trades at a pretty rich valuation of 24X estimated earnings. He just doesn't want any exposure to Canadian retailing. Prefers US retailers instead.