Dollarama is increasingly being viewed as the Canadian equivalent of Costco, according to a recent analysis by Bernstein, a research firm. The assessment, first reported in September 2025, highlights Dollarama’s strong performance and unique position within the North American discount retail landscape.
Bernstein initiated coverage of Dollarama with an Outperform rating and a C$220 price target, arguing the company’s business model is distinct from typical American dollar stores. Analysts noted Dollarama stores are generally cleaner, attract a broader range of income levels, and demonstrate significantly higher productivity – approximately 50% more productive than their U.S. Counterparts. The firm’s report, published on September 17, 2025, pointed to Dollarama’s impressive gross margin of roughly 45% and EBIT margin of 27%, figures considered “unheard of by the US standard.”
Despite a premium valuation near 40x earnings, Bernstein believes Dollarama has further growth potential. The company’s core Canadian business and its stake in Latin America’s Dollarcity already justify its current market value, effectively meaning investors are acquiring future growth opportunities in markets like Mexico and Australia at no additional cost. Bernstein’s long-term model suggests a global opportunity exceeding 10,000 stores, compared to the current 2,700, indicating a potential 19% upside driven by expansion into modern international markets.
The comparison to Costco has resonated with investors, as evidenced by a Reddit discussion on the r/CanadianInvestor forum in September 2025. One user noted owning both Costco and Dollarama, and both having performed well.
In contrast to its bullish outlook on Dollarama, Bernstein initiated coverage of Five Below with a Market-Perform rating and a $160 price target. Although acknowledging a short-term rebound in Five Below’s performance, with comparable sales rising 7% in Q1 and 12% in Q2, the firm cautioned against declaring victory, citing potential temporary factors like tariff-driven pricing and the closure of Party City as contributing to the positive results.
As of March 6, 2026, Costco is advertising new arrivals for March, signaling continued activity in the competitive retail sector.
