Dollarama

Dolarama Group was established in1992 as one of the many retail stores in Canada specializing in affordable products. Following its success it the United states territory it is currently at the growing phase of the firm life cycle. Differentiated from many dollar stores within retail industry, Dollarama Group provides variety of love priced items some of which are available on the seasonal basis. Its success is granted mostly by providing affordable price on the many branded products. The strategy Dollarama Group, by providing convenient locations and simple and easy go through store layouts with more unique products than average dollar stores, provides shoppers with the satisfactory shopping experience.

Comparing Dollarama Group to its U.S. competitors have a great deal of growing opportunities. Constantly increasing number of stores Dollarama seeks to fulfill the need of every Canadian resident to convenient shopping. In Canada there are twice as many shoppers per store than there are in United States.

The profitability of the company is at constant risk due to the different factors. As the company is continuously seeking unique, branded products its cost of operation may increase. Many of the products available at the stores of Dollarama are imported and so the exchange rate plays crucial role in delivering profits.

Through the evaluation of the intrinsic value per share via discounted cash flow method I have fond hat there exists an investment opportunity in Dollarama Group. The stock price of the company being at $73.64 and its intrinsic value to be over twice as much then that, it is predictable that the stock price have potential to grow. At the intrinsic value of $156.26 the company would exceed its target price and reach the equilibrium of its stock price.

In the comparison the intrinsic value generated by the average multiples method is just 1/3 less of the highest price for the stock. Being valued at $110.85 Dollarama stock is underpriced.

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