Key Takeaways
- The S&P/TSX Composite Index slipped 2.5% from recent highs amid inflation worries, tighter monetary policy, softer commodities, and a tech‑selloff, yet remains up ~9.5% YTD.
- Savaria (TSX:SIS) posted Q1 revenue growth of 7% (5.7% organic) and an 18.5% rise in adjusted EBITDA, expanding its margin to 20.4% while reducing net debt.
- Management forecasts Savaria’s revenue to reach $1.6 billion by 2030 (≈12% CAGR) with EBITDA margins staying above 20%; the stock trades at 19.8× forward earnings and yields a 2% monthly dividend.
- Dollarama (TSX:DOL) reported Q1 fiscal‑2027 revenue up 21.4% and EPS up 13.3%; same‑store sales rose 3.5%, though EBITDA margin fell 100 bps to 31.6% due to lower‑margin Australian operations.
- Dollarama plans to grow its store base to 2,200 in Canada and 700 in Australia by FY2034, is building a Calgary distribution centre, and holds a 60.1% stake in Dollarcity targeting 1,050 stores by FY2031.
- Both companies are highlighted for resilient business models, strong financial growth, and clear expansion prospects, making them attractive buys despite broader market headwinds.
- The Motley Fool Canada notes Dollarama is not among its top 10 TSX picks for 2026, citing historic outperformance of its Stock Advisor Canada service and encouraging readers to subscribe for the full list.
Market Context and Recent Performance
Canadian equity markets have faced pressure in recent sessions, with the S&P/TSX Composite Index pulling back roughly 2.5% from its recent peak. The retreat reflects lingering concerns about stubborn inflation, restrictive central‑bank monetary policies, softer commodity prices, and a notable sell‑off in technology stocks that have dampened investor sentiment. Despite this short‑term weakness, the index remains approximately 9.5% higher year‑to‑date, indicating that the broader trend is still positive. This mixed backdrop creates a selective environment where companies with durable fundamentals and clear growth levers can potentially outperform the market.
Savaria Company Profile
Savaria (TSX:SIS) specializes in accessibility and mobility solutions for individuals with physical limitations. Leveraging a substantial manufacturing footprint and a well‑established global distribution network, the firm markets its products—ranging from stairlifts and vertical platform lifts to vehicle adaptations—worldwide. The company’s business model is anchored in serving an aging population and addressing the rising demand for products that enhance independence and safety.
First‑Quarter Financial Highlights for Savaria
In the first quarter, Savaria delivered solid financial results. Revenue rose 7%, driven by 5.7% organic growth supplemented by contributions from recent acquisitions. Adjusted EBITDA increased 18.5%, while the adjusted EBITDA margin expanded by 190 basis points to 20.4%, underscoring the benefits of operational improvements and economies of scale. These metrics highlight Savaria’s ability to convert top‑line growth into stronger profitability.
Balance Sheet Strength and Liquidity for Savaria
Savaria also strengthened its balance sheet during the quarter. Net debt fell 6.7% to $178.7 million, lowering the net‑debt‑to‑adjusted‑EBITDA ratio from 1.03 a year earlier to 0.92. The company ended the period with $324 million in available funds, providing ample liquidity to pursue future growth initiatives, fund acquisitions, or return capital to shareholders. This solid financial position reduces risk and supports strategic flexibility.
Demand Drivers and Long‑Term Growth Strategy for Savaria
Long‑term demographic trends—particularly the aging of populations in developed markets—should continue to underpin demand for accessibility and mobility solutions. To capture this opportunity, Savaria is investing in product innovation, expanding manufacturing capacity, enhancing operational efficiency, and pursuing strategic acquisitions to broaden its market presence. Management forecasts revenue to reach $1.6 billion by 2030, representing an approximate 12% annualized growth rate, while maintaining an adjusted EBITDA margin above 20%. Despite these healthy prospects, the stock trades at just 19.8× analysts’ projected earnings for the next four quarters and offers a monthly dividend with a forward yield of 2%, making it an attractive valuation relative to its growth outlook.
Dollarama Company Overview
Dollarama (TSX:DOL) operates a extensive discount‑retail footprint, with 1,719 stores across Canada and 410 stores in Australia. The company focuses on offering low‑priced, everyday essentials, positioning itself as a go‑to destination for cost‑conscious consumers. Its scale and disciplined merchandising have enabled consistent traffic and sales growth over recent years.
First‑Quarter Results for Dollarama
In the first quarter of fiscal 2027, Dollarama reported robust performance. Revenue climbed 21.4% year‑over‑year, and earnings per share rose 13.3%. Same‑store sales increased 3.5%, reflecting healthy customer demand and traffic trends. Supported by the top‑line growth, adjusted EBITDA rose 17.4% to $582.5 million. However, the EBITDA margin slipped 100 basis points to 31.6%, primarily because the addition of lower‑margin Australian operations diluted overall profitability.
Expansion Plans and Infrastructure Investments for Dollarama
Looking ahead, Dollarama aims to expand its store network to 2,200 locations in Canada and 700 in Australia by the end of fiscal 2034. To support this growth, the company is constructing a new distribution centre in Calgary, slated to become operational by the end of next year; the facility is expected to enhance supply‑chain efficiency and better serve western Canadian markets. Additionally, Dollarama holds a 60.1% stake in Dollarcity, which plans to grow its store count from 752 to 1,050 by the end of fiscal 2031, providing another avenue for earnings diversification and geographic reach.
Strategic Advantages and Outlook for Dollarama
Dollarama’s strengths lie in its proven ability to drive same‑store sales growth, disciplined cost control, and a scalable store‑opening model. The combination of domestic expansion, Australian footprint growth, and the Dollarcity investment creates multiple growth drivers that could sustain earnings momentum. Backed by solid fundamentals, a clear expansion roadmap, and a resilient business model that thrives in both inflationary and discretionary‑spending environments, Dollarama appears well‑positioned to outperform the broader market this year.
Motley Fool’s Recommendation and Related Considerations
The article concludes with a note from The Motley Fool Canada regarding its Stock Advisor Canada service. While Dollarama is highlighted as a promising pick, it was not included in the firm’s curated list of the top 10 TSX stocks for 2026. The service cites historic examples—such as the early 2014 recommendation of MercadoLibre, which turned a $1,000 investment into over $16,000—to illustrate its track record. The Motley Fool reports that Stock Advisor Canada’s average return stands at 91%, outpacing the S&P/TSX Composite Index’s 87% average return, and encourages readers to join the mailing list to access the full top‑10 roster.
Disclosure and Author Note
The contributor, Rajiv Nanjapla, discloses that he holds no position in any of the stocks discussed. The Motley Fool recommends Dollarama and maintains a standard disclosure policy. This ensures transparency regarding potential conflicts of interest and reinforces the analytical nature of the piece.