option
An option offers its holder the right to buy or sell a particular security at a specific price within a specific time frame. Two kind of options are put options and call options.
Dollarama Inc., $87.60, symbol DOL on Toronto (Shares outstanding: 127.9 million; Market cap: $11.2 billion; www.dollarama.com), is Canada’s leading dollar store operator, with 972 locations across the country. It aims to raise that to 1,200 by 2020.
The company has a strong position in a growing niche. It’s reporting rising sales and profits, and it continues to open new stores.
In addition, it has an alliance with El Salvadoran chain Dollar City, which gives it exposure to fast-growing Central American economies. Dollarama supplies its products and expertise to Dollar City, which has about 15 stores in El Salvador and aims to expand into neighbouring countries. Dollarama receives a handling fee in return and has an option to buy control of the company beginning in February 2019.
In its fiscal 2016 first quarter, which ended May 3, 2015, Dollarama’s sales rose 13.0%, to $566.1 million from $501.1 million a year earlier. Same-store sales, which exclude the 73 locations the company opened in the past year, net of stores closed, gained 6.9%. Of that total, 5.9% came from larger transactions, while higher sales volumes accounted for the other 1.0%.
Dollarama introduced items priced at more than $1.00 in 2009 and has gradually rolled out many non-grocery products priced as high as $3.00. In the latest quarter, 73.2% of its sales came from goods selling for more than $1.00, up from 62.3% a year earlier.
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The company has a strong position in a growing niche. It’s reporting rising sales and profits, and it continues to open new stores.
In addition, it has an alliance with El Salvadoran chain Dollar City, which gives it exposure to fast-growing Central American economies. Dollarama supplies its products and expertise to Dollar City, which has about 15 stores in El Salvador and aims to expand into neighbouring countries. Dollarama receives a handling fee in return and has an option to buy control of the company beginning in February 2019.
In its fiscal 2016 first quarter, which ended May 3, 2015, Dollarama’s sales rose 13.0%, to $566.1 million from $501.1 million a year earlier. Same-store sales, which exclude the 73 locations the company opened in the past year, net of stores closed, gained 6.9%. Of that total, 5.9% came from larger transactions, while higher sales volumes accounted for the other 1.0%.
Dollarama introduced items priced at more than $1.00 in 2009 and has gradually rolled out many non-grocery products priced as high as $3.00. In the latest quarter, 73.2% of its sales came from goods selling for more than $1.00, up from 62.3% a year earlier.
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Wise investors value dividends, but many investors don’t realize that company share buyback programs can be just as valuable as dividends, and in some cases, more so.
You enjoy certain advantages with Dividend Reinvestment Plans, but don’t overrate them—they shouldn’t be the sole reason you invest in a stock.
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We think the big banks remain some of the strongest Canadian dividend stocks, but warn against buying them through this split share company.
It’s healthy to be skeptical about certain investments, like stock options, that often turn out to benefit brokers more than investors.