Food and Beverage Sector Ideas

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>>> Domino's Pizza, Inc. (NYSE:DPZ) - Number of Hedge Fund Holders: 44


https://finance.yahoo.com/news/14-stocks-pop-according-jim-150048076.html


6-Month Performance as of March 30 (Relative to SPY): -6.58%

Cramer said that Domino's Pizza, Inc. (NYSE:DPZ) is a "well-run" company that is "coping with food inflation and wage pressure". He named the company among one of his top restaurant stock picks that were "about to pop". As of March 30, Domino's Pizza, Inc. (NYSE:DPZ) has underperformed the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) by 6.58%, over the past 6 months.

At the close of Q4 2022, Domino's Pizza, Inc. (NYSE:DPZ) was a part of 44 investors' portfolios that disclosed collective positions worth $1.46 billion in the company. Of those, Holocene Advisors was the top shareholder in the company and held a position worth $252 million.

LRT Capital Management made the following comment about Domino’s Pizza, Inc. (NYSE:DPZ) in its October investor letter:

“Domino’s Pizza, Inc. (NYSE:DPZ) is the world’s largest franchisor of pizza restaurants with over 13,800 locations in 85 countries. As for any restaurant operator, the key metric to consider for Domino’s Pizza is same-store-sales (SSS) growth. Growing same-store-sales are ultimately how a restaurant business increases earnings from its existing assets. The company continues to impress in this criterion with SSS having grown in the U.S. for 40 consecutive quarters, and an astounding 109 straight quarters internationally.

Two-thirds of the company’s stores are currently abroad, and the international segment remains the company’s largest growth opportunity, as the penetration of convenient fast food remains lower abroad than in the United States. Pizza is a product with exceptionally high gross margins, one that “translates” well across different cultures, and one that literally “travels well”, not losing much of its appeal when delivered in a cardboard box. The rise of 3rd party delivery platforms such as Uber Eats, Doordash and Grubhub is challenging the pizza category as it has expanded the number of choices consumers have for convenient takeout. However, the economics of food delivery remain challenging for most restaurants and platforms alike, while pizza delivery continues to be highly profitable. Regardless of how the “delivery wars” currently playing out end, Domino’s financial results show little impact of this increased competition, and the company continues to deliver exceptional financial performance”

Domino’s Pizza stock is not optically cheap based on forward earnings, however, the company has routinely reported earnings growth of over 20% in almost all quarters since 2009. Given the company’s high growth rate, international growth opportunities, and capital light business model, which allows for returns on invested capital of over 40%, we are happy to continue to hold the shares.

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