Dollarama’s big announcement was that it’s planning to build a new distribution centre in Calgary over the next few years in order to fuel its Western-Canadian growth. With shares now priced at an expensive price-to-earnings (P/E) ratio of over 35x, this retailer may have a hard time living up to its 2024 record of growth going forward.
Meanwhile, the American dollar stores are focused on streamlining operations and closing underperforming stores in order to increase margins. Tariffs on goods from China and Mexico are a big threat to the bottom lines of American dollar store retailers, as those countries produce a large percentage of low-cost goods that make up the bulk of dollar store inventory.
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Why are CEOs selling their shares?
One of the more interesting pieces of publicly-available data when it comes to market sentiment is buying and selling by insiders. (Not to be confused with insider trading—which is the illegal trading of a security using non-public information.) In order to level the playing field as much as possible, publicly-traded companies are required to report when executives and board members sell their shares. They are often paid in shares of stock in order to take advantage of preferential tax treatment—ahem, tax loopholes. Consequently, they may sell shares just to put some cash in their pockets. Yachts don’t buy themselves, after all.
On the other hand, when we read headlines like, “Insider sales hit record high,” it makes you think a bit more about what those at the top of the corporate food chain are seeing. After all, if you want to know what the big shots are really thinking, it makes more sense to look at what they do with their own money, as opposed to opinion surveys.
Take Goldman Sachs. Its share price shot up recently, likely due to speculation that a Donald J. Trump American federal administration will cut certain regulations put in place since the 2008 meltdown. Trump’s team already cut banking regulations designed to keep banks solvent in a crisis the last time he was in office. That move almost assuredly contributed to last year’s banking meltdown. It’s probably not a coincidence that just four Goldman Sachs insiders cashed out more than USD$28 million worth of stock since November 6, 2024.
Meanwhile, Tesla’s board director Kathleen Wilson-Thompson took her chips off the table as well, selling USD$34.6 million worth of Tesla stock since the election. It would certainly appear that she is seeing something that the rest of the market is blind to! Add this data point as one more that supports the “we’re closer to the top of the market than the bottom,” prediction we made last week.
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The loonie versus the greenback
If you’ve been planning a trip States-side within the last couple of years, you’ve no likely noticed that our Canadian dollar doesn’t stretch quite as far as it used to. Canadian tourists will have to look back fondly on the days when they could trade in their loonies for greenbacks at par before heading south to find (usually) lower prices on a vacation or shopping trip. Those days appear to be long gone.
The Canadian dollar is down 1.5% since Trump was elected. It now trades at its lowest point since the depths of the pandemic early in 2020.