In the world of investing, it is not uncommon to see stock prices rise and fall considerably. Dollarama (TSX:DOL) is one such dynamic stock on the Canadian stock market, trading near its 52-week high with a stock chart that looks nothing short of beautiful (see below).

With more than 1,500 stores located across Canada and a dominant market position in the world of discount retailing in this key market, there's a lot to like about how Dollarama is positioned right now. The company focuses on the lower-income consumer, but has been seeing some trade-down from mid- to high-income earners who are looking to buy consumables and seasonal items at under $4. I have to admit, that's more my price range right now for such items, and I can understand the shift many consumers are making on this front, given how bad inflation has been.

Let's dive into why this dollar store giant could be worth owning over the long term.

Growth driven by fundamentals

The first thing I like to see when diving into a company like Dollarama is that its stock price movements are being supported by fundamentals. Indeed, this appears to be the overwhelming case here.

In the company's Q2 2025 results, Dollarama noted strong sales growth of 7.4% year-over-year to $1.6 billion, up from $1.5 billion the year prior. Dollarama has seen strong and increasing demand for low-cost goods, and that's a trend I expect to continue for some time.

Dollarama's revenues are driven by a challenging Canadian economy, which has resulted in consumers spending prudently by opting for value merchandise. With higher demand for consumables, the company's operating income has increased by 15.3% to $422.9 million. Meanwhile, its profitability has grown as reflected by a gross margin that is 45.2% of sales, against 43.9% of sales in the previous year.

International expansion plans

The ability of Dollarama to capitalize on increasing consumer demand for low-cost goods has been driven by its expansion strategy. In the past year, Dollarama has increased its number of stores from 1,525 to 1,583, a move which has increased its comparable store sales. In Q2 FY25, the company opened 23 new stores. Moreover, Dollarama has been expanding its footprint overseas.

As of June 30, 2024, Dollarcity (Dollarama's international stores) owned 570 stores, including 101 in Guatemala, 74 in El Salvador, 338 in Columbia, and 57 in Peru. The company plans to invest massively in opening new stores in Latin America, with the aim to open 1050 stores by 2030. This strategic move will not only grow a new customer base but also diversify Dollarama's revenue streams.

Bottom line

Investing in DOL stock has certainly been a positive move for long-term investors of late. However, there are some secular tailwinds underpinning this rise I think could lead to continued upside from here. For investors looking for a growth stock in the retail sector, Dollarama may be my top pick in this space right now, particularly for the added defensiveness the company's business model provides.