The Panic-Proof Portfolio (Stockchase Research)Domino's Pizza, Inc.DPZBUY ON WEAKNESSOct 27, 2020
Stockchase Research Editor: Michael O'Reilly DPZ missed its last earnings target due to temporary increases in supply costs for labour and food resulting from the pandemic. However, the drivers that pushed to stock to previous highs still exists. As the next wave of the pandemic sets in, you can bet sales will benefit as people choose order out. We would buy this on weakness near $345. Yield 0.79% (Analysts’ price target is $435.40)
Catalyst in 2023 was partnership with Uber Eats. Over 50% is takeout from the store. Growth company. Planning to open more stores, targeting 7-8% growth. He sees buybacks, dividend increases, and 10%+ compound returns going forward.
(A Top Pick Oct 13/22, Up 6.2%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with TECK.B is progressing well. To remain disciplined, we recommend trailing up the stop to $330 at this time.
Five weeks ago, they reported a quiet quarter, but shares jumped 10% on soft news, which means it's hitting a bottom. They['ve had a tough year because of the comps to the pandemic year. Add to that headwind, a strong dollar, and food and labour costs. But Domino's boasts a great long-term track records. Today, they rolled out a 800 Bolt EVs to be used for delivery. He likes that.
Share price down, labour shortage. Solved many of its problems, costs have now peaked, recently raised prices. Open 200-300 stores every single year, franchises mean very low capex, buy back shares. Lots more to go. Yield is 1.31%. (Analysts’ price target is $374.00)
Allan Tong’s Discover Picks The pizza chain and steady fast food stock delivered a tasty quarter recently. Domino‘s U.S. same-store sales came in better than expected, Q3 revenue rose 7.1% and their net global stores growth met guidance at 6.2%. Stronger U.S. sales offsets weakness abroad due to the strong American dollar. The topline climbed to $1.07 billion above expectations, as U.S. sales climbed 2% which offset the 1.8% decline overseas. If the USD weren’t so high, those foreigns sales would have jumped 5.2%. The headwinds forced profit to shrink to $2.79 a share which missed the street’s $2.97. Read 3 Fast Food Stocks to Nibble On for our full analysis.
Stockchase Research Editor: Michael O'Reilly Although recently reported earnings just missed analyst targets, same store sales were up 5% on the year. Management reports cost cutting will further improve economics going forward. It trades under peer value at 26x earnings. Its dividend is supported by a payout ratio under 40%. It has prudently been using some cash reserves to retire debt and aggressively buy back shares. We recommend placing a stop-loss at $295, looking to achieve $417 -- upside over 26%. Yield 1.45% (Analysts’ price target is $417.04)
It reports Tuesday. Many resto stocks have been hammered lately because business has been consistent, but not spectacular. So, if DPZ doesn't deliver super numbers, the street will think it's a Covid, not post-Covid winner. That's wrong, he thinks.
(A Top Pick Jul 20/21, Up 34%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with DPZ has triggered its stop at $465. To remain disciplined we recommend covering the position at this time. Combined with the previous recommendation to cover half, this results in a net investment return of 28%.