Should you invest $1,000 in Artis Real Estate Investment Trust right now?

Before you buy stock in Artis Real Estate Investment Trust, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Artis Real Estate Investment Trust wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

2020 Stocks: Dollarama’s (TSX:DOL) Share Price Could Explode!

Dollarama’s share price has the potential to drop in fiscal 2021 following disappointing Q3 2020 results. Is it a good stock for your TFSA or RRSP?

| More on:

Dollarama (TSX:DOL) operates dollar stores in Canada that sell all items for $4 or less with locations in every Canadian province. Its headquarters, distribution centre, and warehouses are located in the Montreal area.

The company signed a deal this year for a 50.1% stake of Dollarcity, which operates stores in Columbia, El Salvador, and Guatemala. Dollarcity follows a similar concept to Dollarama with products priced up to US$3.

Intrinsic price

Based on my calculations using a discounted cash flow valuation model, I determined that Dollarama has an intrinsic value of $59.61 per share. Assuming less than average industry growth, the intrinsic value would be $47.79 per share, and higher-than-average industry growth would result in an intrinsic value of $79.34 per share.

At the current share price of $45.51, I believe Dollarama is slightly undervalued. Investors looking to add a retail company to their TFSA or RRSP should consider buying shares of Dollarama. I would recommend following the stock and waiting until the end of 2020 as a correction in the market could allow investors to buy the stock at a cheaper price.

Dollarama has an enterprise value of $20.7 billion, which represents the theoretical price a buyer would pay for all of Dollarama’s outstanding shares plus its debt. One of the good things about Dollarama is its low leverage with debt at 11.6% of total capital versus equity at 88.4% of total capital.

Financial highlights

For the nine months ended November 3, 2019, the company reported a mediocre balance sheet with negative retained earnings of $563 million. This is not a good sign for investors, as it suggests the company has more years of cumulative net loss than net income. The company’s asset growth was driven by the addition of $132 million in assets from its Dollarcity stake.

Overall revenues are growing with an increase from $2.5 billion in 2018 to $2.7 billion in 2019 (+9.4%). The growth in revenues trickled down and grew the company’s bottom line from $374 million in 2018 to $385 million in 2019 (+3%)

The biggest change to the company’s statement of cash flows is the US$40 million (CAD$53 million) upfront payment for a stake in Dollarcity.

The company renewed its normal course issuer bid (NCIB) in July 2019, which allows it to repurchase and cancel up to 15,737,468 common shares (approximately 5% of outstanding shares). During the nine months ended November 3, 2019, the company repurchased and cancelled 3,086,563 common shares for cash consideration of $145 million. This is often a strategy used by management to indicate to shareholders it believes the current share price is undervalued.

Dollarama has no outstanding amounts under its credit facility, which is a good sign, as it suggests the company generates enough cash internally to manage its cash outflows.

Foolish takeaway

Investors looking to buy shares of a financially stable retail company should consider buying shares of Dollarama. 2020 will inevitably be a rough year for the markets, and I recommend investors wait for the ideal time to buy in.

Despite the company’s negative retained earnings, the company still boasts an intrinsic value of $59.61, which represents significant upside to the current share price of $45.51. Further, the company’s NCIB and no outstanding draws on its revolver should offer investors assurance of share price appreciation in the near future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chen Liu has no position in any of the stocks mentioned.

More on Investing

senior man smiles next to a light-filled window
Dividend Stocks

How I’d Invest My $7,000 TFSA Across These 3 Canadian Stocks for Dividend Income

Investors looking for Canadian stocks for dividend income that can last decades should consider buying these three stocks today.

Read more »

A worker uses a double monitor computer screen in an office.
Dividend Stocks

National Bank vs. Bank of Montreal: How I’d Divide $12,000 Between Banking Stocks

Here's how I would think about splitting up a $12,000 prospective investment in National Bank of Canada (TSX:NA) and Bank…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

Canadian National Railway: How I’d Approach This Blue-Chip With $10,000 in 2025

Despite current macro headwinds, Canadian National Railway remains a rock solid, blue-chip pick for long-term investing.

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

April Income Strategy: Where to Invest $10,000 in Big Dividend Stocks

These stocks offer attractive yields for income investors.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

How I’d Invest $50,000 in TFSA Cash for 2025

Looking to get started with a TFSA? Here's exactly how to get going with these top stocks.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Here’s the Maximum Amount Canadians Could Have in a TFSA

Just because you hit the max of your TFSA doesn't mean that's what it's worth. Here's how to make even…

Read more »

Man in fedora smiles into camera
Investing

TFSA Income: 2 Top Canadian Dividend Stocks for Pensioners

These stocks have increased their dividends annually for decades.

Read more »

data analyze research
Energy Stocks

Here’s How Many Shares of Hydro One Stock You Should Own for $2,000 in Yearly Dividends

This energy stock doesn't just offer major dividends but a stable future, even within the energy sector.

Read more »