Dollarama updated November 25, 2017

Dollarama is updated and rated (lower) Sell at $162.03. For a number of years I have described Dollarama as a great company and one of the best managed companies in Canada. But it has always seemed expensive and I believe the highest I have rated it is (lower) Buy. In 2017 it is up another 65%. Despite all its great characteristics the current P/E of 39 seems very high and may be pricing in too much future growth.

It will report its Q3 earnings on December 6th. That may be another strong quarter possibly boosted by the fact that it began accepting credit cards in all stores as of May 1.  Starting in January, it will face a significant boost in wages due to higher minimum wages in Ontario. That could slow growth. And overall, it could struggle to continue to show same store sales growth in the range of 6% quarter after quarter.

If I had a large position in this stock, I would at least trim the position. I do not own any shares.