Want to invest in the stock market but are worried about economic uncertainty? Consider investing in a company that can thrive in all market conditions, such as the value retailer Dollarama.
In this guide, you’ll find an overview of the retail chain, learn how to buy Dollarama stock, as well as get suggestions for the best brokers to use.
What is Dollarama?
The company’s roots go back to 1910 when Salim Rossy opened his first S.Rossy Inc. store on Craig Street in Montreal, Quebec. Over the next two decades, Salim’s ten children became involved in the business, gradually expanding the company. Then, in April of 1992, in Matane, Quebec, Larry Rossy (Salim’s grandson) transformed one of his stores into the first Dollarama with the idea of offering all items for a dollar or less.
Dollar stores are retail outlets that offer a broad range of relatively low-priced items, typically at a single-price point of one dollar. Dollarama, valued at almost $3 billion, was Canada’s most valuable retail brand in 2022.
In addition, the value store ranked third for everyday grocery shopping among consumers in Canada.
Dollarama went public through an initial public offering (IPO) in October 2009. Dollarama stock trades on the Toronto Stock Exchange (TSX) under the ticker DOL. Dollarama has been popular among investors recently due to its robust business model. As of February 2023, analysts predicted a 15% growth for Dollarama stock price for the upcoming year.
Step-by-step process on how and where to buy Dollarama stock
Dollarama is a publicly-traded company, which means you can buy Dollarama stock through a broker. The steps involved in purchasing Dollarama shares are summarized in detail in the following section.
Step 1: Choose a broker
To buy Dollarama stock online, you’ll need a brokerage account. While several platforms are available, the one that suits you will depend on your investment style (long-term buy-and-hold strategy or active day trading) and needs (e.g., whether you want to trade more advanced financial products such as options). When assessing brokers, consider the following features:
- Fees: Brokerage fees are a type of fee collected by brokers to execute your transactions or provide specialized services. Fortunately, today, the vast majority of online brokers offer commission-free stock and exchange-traded funds (ETF) trading;
- Security: Pick a trustworthy broker by ensuring it is fully licensed by state regulatory authorities as well as FINRA and registered with the Securities and Exchange Commission (SEC);
- Trading tools: Active traders may prefer brokerage accounts with all the bells and whistles. Some brokers offer fully customizable platforms with comprehensive analysis tools or access to additional data for an extra cost. If such additions are unnecessary for your purposes, avoid paying extra for them. It’s typically a good idea to look for a user-friendly platform with a competitive fee structure if you are new to stock trading. A dedicated section with investing tips and tricks is a bonus;
- Access to market data: You should search for a platform that allows access to solid market research and reporting tools to help you trade confidently with updated data;
- Fractional stock trading: Fractional shares allow investors to buy stock or ETFs by the dollar amount instead of the number of shares; especially helpful for investors who don’t have unlimited capital but want to build a diversified portfolio or are looking to set up a dollar-cost averaging strategy.
Where can I buy Dollarama stock?
Thanks to various online brokers, the stock market has never been more accessible as well as affordable, so that you can buy Dollarama stock with a few clicks. However, choosing the right broker optimized for your needs (investing goals, educational tools, trading style) is critical for a stress-free trading experience.
To securely invest in Dollarama and buy DOL stock, consider Interactive Brokers (IBKR), which offers:
- Commission-free stock trading;
- Global stock-trading on 90+ market centers;
- Fractional shares available;
- Extra income on fully paid shares;
- Lowest financing rates for margin accounts in the industry;
- No account minimum.
Step 2: Fund your account
Once you have decided on a broker, it’s time to fund your account. Remember, it can sometimes take up to three days for the money to reach your account.
Step 3: Research the company
When investing your money in the stock market, research is crucial. Of course, the best place to start your research on a stock is to go through its public filings with the SEC. Fortunately, as a publicly traded company, Dollarama’s quarterly (form 10-Q) and annual (form 10-K) earning reports, SEC filings, shareholder presentations, as well as recent press releases can be accessed directly from their investor relations section.
Within those reports, you can find details on Dollarama’s financial performance and strategies for the future, as well as information about challenges facing the company or industry as a whole, such as a tight labor market, inflationary pressures, and supply-chain disruptions.
After weighing both the expected risks and rewards, decide whether you want DOL stock as part of your investment portfolio.
Step 4: Decide how much you want to invest
Now that you’ve decided that Dollarama stock is the right choice for you, you’ll need to determine how much you want to invest.
The amount of money you invest depends on the stock price and the number of shares you want to buy. If the share price of a stock you’re interested in is financially out of reach, you can also explore fractional shares. Fractional shares allow you to purchase shares on the dollar amount you’re comfortable with, so you may end up with less than a whole share, a whole share, or more than a whole share.
Because investing can have unpredictable returns, it’s essential only to invest what you can afford to lose and to be mindful of your risk appetite.
Step 5: Place your order and buy Dollarama stock
Once you decide on the number of shares or the dollar amount you’d like to purchase, you can place your order. If you’re working with an advisor, tell them you’d like to buy Dollarama stock and how much you can invest, and they’ll do it for you. If using a brokerage account, simply log in and enter the ticker DOL in the search bar.
There are a few different execution options to choose from, including:
- Market order: A market order is an order to buy the stock at the current market price that is generally executed immediately (subject to availability);
- Limit order: A limit order is processed once the stock reaches your specified price. For example, imagine you want to buy Dollarama stock at $55 or lower. You would then set the limit price at $55, and the order will only execute when the stock reaches the set price or lower;
- Options contract: Options speculation allows for leveraged positions in a security at a fraction of the cost of the underlying asset. A call option allows the trader to profit if the price of the stock increases, and a put option enables them to profit if the stock price declines. Remember, derivative instruments can only be traded on a margin account, which typically has higher minimum balance requirements than standard brokerage accounts.
Step 6: Monitor your investment
You want to keep sporadically inspecting the company’s performance by checking the same annual and quarterly reports you used to conduct your preliminary research.
So, while “set it and forget it” is a solid strategy for a diversified portfolio of ETFs, for single stocks like DOL, investors should keep a close watch on press releases, company health indicators such as revenue and net income, retail industry performance (and factors that can influence it, e.g., disruptions to global supply chains) as well as overall economic conditions. Then, depending on your financial goals, use that knowledge to reassess whether it’s best to hold onto the stock or sell it.
You may also want to track the performance of similar stocks in the industry for comparisons, such as Walmart (NYSE: WMT) or Dollar Tree (NASDAQ: DLTR).
Dollarama stock price
Should I buy Dollarama stock?
Besides looking at Dollarama’s fundamentals, you can use technical analysis to evaluate the company and identify trading opportunities in price trends on chart patterns for its stock.
This gauge displays a real-time technical analysis overview for your specified timeframe. It can be a valuable technical analysis tool for many traders by simplifying trading decisions by demonstrating the real-time recommendations of popular technical indicators such as moving averages and oscillators.
Disclaimer: TradingView does not recommend trading financial instruments based exclusively on the advice of the Technical Rating indicator. These recommendations cannot predict future movements and are meant as assistance for spotting potentially favorable buy/sell conditions if this is consistent with their strategy.
Common mistakes to avoid when investing in stocks
Mistakes are expected when investing in stocks but can be avoided if you recognize them. For an in-depth guide on investing mistakes, we have compiled a list of 17 common mistakes and tips for preventing them. But, for now, let’s list some of the most typical ones:
- Not performing your due diligence on the stock;
- Having unclear financial goals;
- Attempting to time the market;
- Failing to diversify;
- Letting your emotions rule the investment decision-making process.
How to sell Dollarama’s stock?
You can sell Dollarama stock if you see the company performing differently than expected or after reaching your desired financial goal.
If you’re working with an advisor, they can create a sale order for you. However, if you have your own broker account, simply log on, navigate to the stock’s detail page, input the number of shares or dollar amount you want to offload, and tap sell.
Pros and cons of buying Dollarama stock
So, now that we’re familiar with Dollarama and how to buy its stock, let’s explore the pros and cons of investing in it.
- Pays a dividend: Dollarama is a dividend stock with an annual dividend yield of 0.277% (as of February 21, 2023);
- Discount product: This allows Dollarama to profit in poor economic conditions as people tend to cut costs wherever possible when times are tough;
- Steady growth: Dollarama’s annual sales were around Can$4.3 billion during the fiscal year ending in January 2022, a two-fold increase since 2014. Moreover, as of February 21, 2023, DOL stock is up by almost 20% over last year;
- The number of locations: With around 1,400 stores nationwide, Dollarama dominates Canada’s value retail chain market regarding the number of stores. By contrast (as of 2021), Walmart superstores and Winners amounted to only 603 stores.
- Fierce competition: Though Dollarama is by far the biggest and most frequently visited dollar store in Canada, it must still deal with rivals in the sector;
- Adverse macroeconomic conditions: Inflationary environment, rising interest rates, shortage concerns, and tariff increases for imported products;
- Fixed-price: Since Dollar Tree is a fixed-price retailer, it has less flexibility to hike prices when faced with inflationary or other cost pressures.
From its ability to profit in stagnant economic environments to its dominance in the domestic market, investing in Dollarama can be a reliable, long-term bet for Canadian investors to consider.
However, remember to do your own independent research and have solid risk management tools in place before entering the market. Ultimately, the goal of investing is to make money over the long term, so investors should focus on where companies will be ten years from now rather than short-term fluctuations in the stock market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about Dollarama
What is Dollarama?
Dollarama is a Canadian value retailer offering a broad range of general merchandise, consumables, and seasonal items at low fixed prices.
How to buy Dollarama stock?
Dollarama is a publicly traded company, and its stock is available on the Toronto Stock Exchange under the stock symbol DOL, which means you can buy shares of Dollarama through your brokerage account.
Should I buy Dollarama stock?
Whether Dollarama stock is a suitable investment should be based on your risk tolerance, portfolio size, financial goals, and market experience. So always conduct your due diligence before trading. Also, note that past performance doesn’t guarantee future returns.
Where to buy Dollarama stock?
You can buy Dollarama stock in Canada through a licensed stockbroker such as Interactive Brokers.