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Investing.com - Bernstein initiated coverage on Dollarama Inc. (TSX:DOL) with an Outperform rating and a price target of C$220.00 on Wednesday.
The research firm highlighted that Dollarama differs significantly from typical American dollar stores, noting its clean, well-stocked stores appeal to all income groups and are approximately 50% more productive than U.S. dollar store chains.
Bernstein pointed to Dollarama’s impressive financial metrics, including a 45% gross margin and 27% EBIT margin, which it attributed to the company’s higher discretionary and private label mix, strong sales productivity, and lean operating model.
The firm compared Dollarama to "Canada’s Costco," while noting it trades at a cheaper valuation despite currently being near its all-time high valuation of approximately 40 times price-to-earnings.
Bernstein expressed optimism about Dollarama’s expansion into untapped international markets with limited competition, suggesting investors can acquire this growth potential "essentially for free" at the current valuation.
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