Is Dollarama a Buy After Outperforming for Years?

Few retail stocks on the market resonate with investors as much as Dollarama (TSX:DOL). Dollarama’s performance over the past decade has been, in a word, impressive. But does that still mean that investors still consider Dollarama a buy in 2026 and beyond?

Let’s try to answer that question.

Revisiting Dollarama

Dollarama is the largest dollar-store retailer in Canada, with over 1,500 locations sprinkled across every province. The company offers a wide range of products and different fixed-price points.

Those fixed-price points provide a sense of value to Dollarama’s customers, many of whom are looking to save money. Even better, Dollarama often bundles lower-priced goods to enhance value appeal further.

Collectively, the mix of products, effective cost controls, and scaled buying power helps support high margins. This is unique to Dollarama in Canada, as its U.S.-based peers have struggled in recent years.

The strategy has worked well. The stock has outperformed the broader market, boasting a 130% return over the past three years and a whopping 280% over the past five years. That impressive record has attracted institutional investors and helped to support a valuation multiple higher than most retailers.

But does that alone make Dollarama a buy?

Can that growth continue?

Dollar stores generate a reliable, strong revenue stream backed by healthy margins. They are also recession-resistant, drawing in more customers when the market contracts.

In the case of Dollarama, that compounds when you factor in the sheer number of stores, the unique pricing model, and the overall market.

By way of example, in the most recent quarter, Dollarama reported sales growth of 22% year over year, with revenues topping $1.36 billion.

Dollarama’s future growth isn’t only coming from Canada.

Prospective investors may not realize this, but Dollarama’s growth isn’t just a domestic story. The company also operates a growing presence in Latin America under the Dollar City brand, and has recently expanded into Australia.

The Latin American venture, in which Dollarama has a 60% stake, boasts over 680 stores across several countries. An aggressive expansion has the brand growing its network to over 1,000 stores within the next five years.

Dollarama is also eligible to bump its stake in the Latin American chain to 70% next year.

Turning to Australia, the recent acquisition of the Reject Shop also holds long-term growth potential. That brand has a network of nearly 400 stores in Australia. Dollarama has plans to expand its footprint in that market in addition to rebranding it under the Dollarama name.

Turning to Australia, Dollarama recently announced a definitive agreement to acquire The Reject Shop, Australia’s largest discount retailer with nearly 400 stores. The all‑cash deal, valued at approximately $233 million, gives Dollarama a direct platform for expansion in a new geography.

Over time, the company intends to grow the store network and integrate Dollarama’s merchandising and sourcing model, with potential rebranding opportunities as the business scales.

Both markets offer a strong growth appeal for the chain to continue expanding its presence. For growth-focused investors, this may be enough to consider Dollarama a buy.

Is Dollarama a buy for your portfolio?

For long‑term investors seeking a dependable growth compounder, Dollarama offers an attractive mix of strong same‑store sales growth, high returns on capital, and a long runway from both domestic and international markets.

With its proven execution and expanding global footprint, Dollarama still stands out as a buy for a well‑diversified portfolio.

Throw in the track record of the stock, which is backed by fundamentals, and you have a unique option that would be a welcome addition to any well-diversified portfolio.

The post Is Dollarama a Buy After Outperforming for Years? appeared first on The Motley Fool Canada.

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More reading

• 2 Canadian Stocks to Buy for Your $7,000 TFSA Contribution for 2026
• Set and Forget: The 4 Stocks That Can Kickstart Any Long-Term Portfolio
• These Canadian Stocks Have Serious Growth Potential in 2026
• The 1 Single Stock That I’d Hold Forever in a TFSA
• Top Canadian Stocks to Buy for Your TFSA

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.