Dollarama Inc. is the retail stock that keeps on giving, trading today just under all-time highs after its steady climb over the past several years. And at least one analyst believes it's not through yet, arguing there's a good buying opportunity to be had in the run-up to next Wednesday's quarterly results.
The Street expects fiscal fourth-quarter earnings of about 68 cents per share, which would be well ahead of 56-cents-per-share earnings a year earlier. The odds seem good that Dollarama won't disappoint; it's beaten consensus estimates in each of its last nine quarters.
Canaccord Genuity analyst Derek Dley is expecting a 14 per cent year-over-year rise in revenue to $464-million and same-store sales growth of 5.0 per cent. "We believe Q4/F12 results will be aided by favourable weather conditions throughout much of the country," he said in a note. "With the consumer spending environment remaining relatively cautious, we believe Dollarama's value focus continued to outperform its retail peers."
Mr. Dley raised his price target by $4 to $51 and reiterated his "buy" rating. "Dollarama remains our preferred high growth retailer, given its visible network expansion opportunities in an under-penetrated Canadian market, industry leading profitability metrics, healthy free cash flow growth, and flexible balance sheet," he said.
Raymond James Ltd. analyst Kenric S. Tyghe was more cautious, reiterating a "market perform" rating. But he still raised his price target by $4 to $42.
He notes that Dollarma's earnings will benefit from the fact that Halloween - a robust period for sales - now falls in the fourth quarter this year after a shift in the company's fiscal calendar. And he raised his same-store sales growth estimate for the quarter to 4.9 per cent from 4.1 per cent. Still, that's below the 5.3 per cent growth recorded a year ago, and he thinks higher energy and transportation costs more than offset efficiency gains.
Raymond James Ltd. analyst Ben Cherniavsky upgraded CAE Inc. to "outperform," as the company secured $90-million in new flight simulator contracts this week. He said the company's valuation is much improved after the stock's recent price weakness. "Although there may not be any imminent catalysts on the horizon, we believe that now is a reasonable time for patient, longer-term investors to be buying CAE's stock."
Upside: Mr. Cherniavsky maintained a $12 price target.
Shaw Communications Inc. shares are up about 8 per cent since mid-February as some investors concluded that market share losses to Telus have peaked. Canaccord Genuity analyst Dvai Ghose thinks that's a mistake. The company is still losing share to Telus, and its move back to price discounting in recent months has negative implications for financials, he maintains. "The stock looks overvalued," he said.
Downside: Mr. Ghose reiterated a "sell" rating and $18 price target.
Orbite Aluminae Inc.'s memorandum of understanding with the world's largest aluminum company should mean good things for the company's shares down the road, according to Jennings Capital Inc. analyst Ken Chernin.
Orbite and Russia's UC Rusal will invest in a joint venture to construct the first smelter-grade alumina production facility employing Orbite's technologies. Mr. Chernin says the deal mitigates start-up risks and should shorten Orbite's learning curve, as well as lend a shot of credibility to Orbite's technology.
Upside: Mr. Chernin is maintaining his "speculative buy" rating and $11.50 (Canadian) price target.
The landing of $39-million in contracts by a CVTech Group Inc. CVT-T subsidiary will go a long way in helping the company turn its fortunes around, says Desjardins Securities Inc. analyst Pierre Lacroix.
Thirau won the contracts from Hydro-Québec and Bell Canada for infrastructure installation work. These and other contract extensions "appear to be early indications that 2012 will be much more active for CVT," says Mr. Lacroix. He believes that Hydro-Québec's increased capital spending plans for 2012 may mean further contracts could be awarded near mid-year.
Upside: Mr. Lacroix maintained his "buy - above average risk" rating and $1.60 price target.