Domino's Pizza Share Discussion Threads

[stevepaulcarr] 30/7/2007 15:58

Indieman.

He he he!

Yes, keeps the brain ticking along.

And good luck to you (so long as it doesn't effect my DOM shares too much!)

SPC.

[indieman] 30/7/2007 15:17

Steve,

Quite right, but a surprising proportion of posters claim to be long-termers and yet post several times a day. I do this to augment my pension, prove my methodologies and pit my wits against others. My life and/or future doesn't depend on it.

It has the additional benefit of providing an excuse not to do as much around the house as my better half might want.

[stevepaulcarr] 30/7/2007 12:25

"They have little to gain by the day to day chat except on a hobby basis."

This is indeed true, but still doesn't exclude them from throwing in their tuppence worth when perhaps a stock's situation allows.

Having still a passing interest in short term trading (for me this meant days or maybe weeks, depending on trailing stop losses being intact), my indicators point to a rise over the short term (for DOM, that is).

[indieman] 29/7/2007 18:28

The Sunday Telegraph says take profits on DOM.

The general concensus on the state of the market is it's a temporary thing. That's a shame because I prefer to see them disagreeing with me.

[indieman] 28/7/2007 16:33

Steve,

The extra effort/little reward comment was directed toward long term investors who post repeatedly. They have little to gain by the day to day chat except on a hobby basis.

[stevepaulcarr] 28/7/2007 16:25

Indieman.

Amen to that.

Funny though, to me it's the reverse - investing for the short to medium term requires more effort for little (if any) extra reward! That's not to say I don't agree with people who do it, it's just I've tried it and it's not for me.

It's like you say, depends on your own circumstances, experiences, risk tolerance, patience, time-scales and targets.

[indieman] 28/7/2007 15:58

Steve,

I agree with almost everything you say. The important thing is to know your own investment time-scale and your attitude to, and ability to tolerate, risk.

A long term investor can afford to remain unaffected by a short/medium term downturn. The fact is that most people who read these boards are not long term investors, to judge by their posts. People who post regularly on the shares they own are not buy and forget investors: I'm not. It would require more effort for little extra reward. I invest for the short to medium term (3 weeks to 12 months).

Without people knowing the time-scale a poster is considering, most bb comment is pretty pointless. Traders argue with investors about what will happen 'soon' because their own ideas of 'soon' are personal but are assumed to be universal.

[stevepaulcarr] 28/7/2007 14:14

theeagle2

Cheers! Think I'll have a rest now - my fingers are aching after all that keyboard tapping!

[theeagle2] 28/7/2007 13:59

stevepaulcarr - thanks for sharing your thoughts on DOM & the Market in general!!!

[trt] 28/7/2007 09:30

Independent newspaper:

Ten stock market bargains: Top investment managers and stockbrokers pick their favourites
After more than four years of relatively uninterrupted growth, Britain's equity markets have begun to falter over the past few months, with the FTSE 100 index of the UK's largest companies hovering around the 6,500 mark. But in spite of several years of strong returns, many fund managers still believe the UK market is undervalued, claiming the recent slowdown merely presents a strong buying opportunity. We asked 10 of the UK's top investment managers and stockbrokers to each pick their favourite summer bargains
Published: 28 July 2007:

Makis Kaketsis, manager of the F&C UK Dynamic fund: Domino's Pizza

"One of my long-standing positions and one which I continue to feel is undervalued is Domino's Pizza. The company holds the exclusive master franchise to own, operate and franchise Domino's Pizza stores in the UK and Ireland. It owns the commissaries which supply the raw materials down to the franchises. The company currently has 450 stores and aims to expand this to 1,000 stores by opening 50 stores a year. Although the market thinks Domino's is expensive – it is currently trading at a premium to the market - it overlooks the fact that the business has no debt and does not require large capital expenditure. For every £1 the company makes in profit, the majority can be returned directly to shareholders. It has a strong national brand, and there are plenty of growth opportunities. In the US, 75 per cent of the population has had a pizza delivery from Domino's, versus only 23 per cent in the UK."


Personally I think we have further to fall in the current market climate, but watching the market closely when we get the upturn I will be piling in heavily to maximise profit.

[indieman] 28/7/2007 08:44

If this turns into a bear market rather than a correction, high p/e companies will suffer most. In fact it's likely that the FTSE-100 companies will do relatively better than the general market as they have been lagging it for several years and the average FTSE-100 p/e ratio is a very conservative 12 compared to quite a bit more generally. My long term indicators suggest a 2-5 month correction rather than a proper bear run.

The bear market in bonds made a general stockmarket drop almost inevitable and I pointed this out when I sold in mid-June. trt got his logic right but his facts wrong and disagreed with me. Now he seems to have been exposed as an amateurish ramper. Hardly a surprise there.

DOM is a very good company and will do well long-term relative to many other growth companies, but it isn't immune to a secular downturn if one occurs.

[soulman08] 27/7/2007 23:14

yes, its been going on for about 3 days, its any ones guess how it effects the company, it was out in the public domain yesterday and today the price went up. However this just makes it more public and the dow doing another 200 points does not help. A trader on Bloomberg sees next week being just as bad, heaven help us, but dom will get to 3.30 soon.

[theeagle2] 27/7/2007 23:08

Newsnight tonight have just featured DOM problem regarding one specific franchisee deduction of accomodation, car costs etc from salaries resulting in minus sums left. DOM have promised to try and get the situ resolved quickly regarding the 8 employees.

Short term the negative press may hit the share price next week. Anyone else see the Newsnight article???

[shopper21544] 27/7/2007 22:58

Very bad news for the company on Newsnight and an exceptionally poor performance by the CEO. He looked evasive and extremely nervous, though he got lucky with the berk put up from the union who was not much better. He needs to investigate the company's problems fast and spend what it takes to put things right. And he needs some good PR advice too.

[stevepaulcarr] 27/7/2007 19:32

Indieman.

What you say is true, although I wasn't merely saying a fast grower will out perform a slow grower – doesn't take much to figure that out! :-)

The point I was making was that the P/E ratio when applied to growth stocks, isn't necessarily the most useful of indicators – a high one can be justified in the right circumstances, whether it's a bull, bear or drifting market.

The questions I pose are merely concerned with DOM's prospects, and whether DOM can live up to the high price, not whether the market can sustain the high price – there's a subtle difference.

I guess it depends whether you follow the company or the market. Personally, I do the former.

Hope you had a good time on your hols, by the way.

[indieman] 27/7/2007 17:40

spc,

The faster grower will, by definition, always outgrow a slower grower. The question you are really posing is whether the general market can sustain a p/e a ratio of 40 for such a stock. In a bear market, that is very questionable.

[stevepaulcarr] 27/7/2007 16:41

As a general rule of thumb, a growth stock should sell at or below it's growth rate. So, last count, with DOM, forecast P/E is 34 for year end Dec 2007 with growth rate of 21%. This makes DOM potentially expensive if nothing changes.

However, a high PE can be ok for a growth stock so long as the growth predicted is realised. If it isn't, there's usually trouble. Such is the risk with growth stocks.

To para-phrase one of my investment 'heroes', if I had a choice between owning a 15% grower selling at 30 times earnings, or a 30% grower selling at 40 times earnings, I'd choose the latter. A company with a high P/E that's growing at a fast rate will eventually outperform one with a lower P/E that's growing at a slow rate. The question is whether it can keep up that growth rate long enough to catch up with it's high price. Thankyou Peter Lynch!

Can Dominoes I wonder? It wouldn't surprise me, which is why I continue to hold. But I like to buy more in a company when stock is cheap, and to me, the facts suggest DOM isn't.

The market is such that you nearly always have other, more attractive stocks to hunt down.

[theeagle2] 27/7/2007 14:24

Could we be blue soon???
Edit YES!!! Excellent recovery. Consolidate around 265-290 for a few weeks.

[indieman] 26/7/2007 17:07

Soulman,

Sorry for the late response, we've been on holiday for a few days. I can't and therefore don't short any shares. I've given my reasons for thinking DOM is irrationally high.

I find it very difficult to justify a p/e ratio remotely as high as DOM's. I said in mid-June that I was concerned for the markets overall and that's when and why I sold DOM. It looks like my concerns were justified.

In a bear market, a typical high growth company can justify a p/e ratio of maybe 50% more than an average company. Say 10 for a typical company and 15 for the high growth one. These are rough comparisons. Buy growth companies generally when the p/e premium is much lower and buy ordinary companies in preference when the premium is higher.

I believe we are in a bear phase although not a long or particularly severe one.

[trt] 26/7/2007 14:18

Thought you might say that ... money to be made on the bounce back up though !!!

[techmark] 26/7/2007 13:51

This is what happens when market sentiment changes and a stock is overvalued!

[mitzis] 26/7/2007 08:57

Naughty naughty.

[techmark] 26/7/2007 08:55

"current like-for-like run rate looks unsustainable"

That's says to me there's disappointment ahead on growth expectations.

[soulman08] 26/7/2007 00:26

well that 3.20 still sounds good to me, not really negative is it. i will take that all day long another 30 points