A Tasty Investment Opportunity
When it comes to food-service stocks, investors often approach with caution. The industry is known for being highly competitive and low-margin, making it a challenging space to thrive. However, every now and then, a gem emerges that defies these conventions. Domino’s Pizza (NYSE: DPZ) is one such company, and it’s likely to remain a compelling investment opportunity for the foreseeable future.
A Recipe for Success
Domino’s has been on a tear, becoming the world’s largest pizza chain in 2021 with over 18,848 locations. What’s more impressive is that this growth hasn’t been just about expanding its footprint; total revenue growth has improved significantly since 2013, with same-store sales growth remaining positive every quarter. Profits have also increased at an even better pace, despite the recent bout of inflation. This is a testament to the company’s ability to deliver a product that people want and can afford.
A Bargain Price
Domino’s stock is currently undervalued, no matter how you measure it. Shares have pulled back 17% from their peak in June, and the stock’s weakness extends back to 2022. However, the analyst community remains bullish, with a consensus price target of $483.57, roughly 12% above the current price.
A Tasty Dividend
The third reason to consider investing in Domino’s is its dividend. With a forward-looking yield of 1.4%, it may not be the highest yield available, but it’s a reliable payment that should be seen as an additional bonus to the company’s consistent growth. Domino’s has increased its annualized quarterly payout for 11 consecutive years, with a compound annual growth rate of around 20%.
A Seal of Approval from the Oracle of Omaha
Warren Buffett, the legendary investor, has given Domino’s a vote of confidence by purchasing a stake in the company through his firm, Berkshire Hathaway. While the stake is relatively small, it’s a significant endorsement from one of the most successful investors in history.
A Compelling Investment Opportunity
Before investing in Domino’s, consider the bigger picture. The company’s consistent growth, undervalued stock, and reliable dividend make it an attractive opportunity. Add to that the seal of approval from Warren Buffett, and it’s hard to ignore the potential of this investment.
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