David Desjardins
Contrarian, Deep Value

Dollarama: I Would Not Touch It With A 10-Foot Pole

It costs approximately $700,000 to open a new Dollarama (OTC:DLMAF) store. It includes $500,000 of capital expenditures and $200,000 of inventory. Based on historical numbers, the payback period is around two years. This structure has allowed the firm to generate an impressive return on invested capital over the years. This aspect is lessened by the fact that a wonderful business is not worth an infinite price. At risk of paraphrasing the expression of Mark Twain, everything looks like a durable economic moat for somebody searching for it. Because the stock is trading in Toronto, all dollar amounts are expressed in Canadian dollars.

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The impressive earnings per share growth realized by Dollarama since its initial public

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