The statistics are mind-blowing.
Close to 93% of Americans eat this cuisine every month. More
than 3 billion units are sold yearly in the United States alone,
an annual revenue stream of $32 billion. There are 70,000
U.S.-based restaurants that serve this dish, yet a full 65% of
the restaurants are small and independently owned. Clearly, this
leaves a huge upside for corporate chains to exploit this
If you haven't guessed, I'm talking about pizza. Yes, the
humble pizza pie produces a gigantic revenue stream and is loved
by millions worldwide.
Everyone has their favorite pizzeria and type of pizza. In my
case, my favorite remains Fiori's Pizzaria in Pittsburgh. This
hole-in-the wall restaurant truly has the best pizza on earth. I
don't know if it's the water, the heaps of mozzarella cheese, the
slightly sweet crust, or a combination thereof, but something
really makes this pizza stand out of from the crowd. I know each
time I make a trip to the Steel City, it's on my list of
While my favorite pizza is a craft-made masterpiece by
Pittsburgh's finest pizzaria, I have also had quite a few pizzas
from the chain restaurants. Many pizza connoisseurs dismiss these
pizzas as being too bland and predictable. However, one of the
leading chains is making serious inroads toward a very
I am talking about the world's second-largest chain,
Domino's Pizza (
In college, I ate too much Domino's pizza, since it was one of
the few places that delivered to my school and always had
specials for poor students. Keep in mind, this was in the late
1980s when Domino's truly tasted like cardboard compared to good
pizza. For a starving student who was tired of the cafeteria,
however, it tasted like a slice of heaven.
After tiring of it in college, I avoided Domino's for years.
But as a traveler, I would order Domino's every so often, usually
when it was the only pizza available late at night. Over the past
five years, I have noticed a distinct improvement in the quality
and taste of Domino's. Domino's pizzas have progressed from
bland, lifeless pies to ones bursting with flavor, taste and
texture. While it will likely never rival the Pittsburgh masters
in my book, Domino's can hold its own against nearly everything
on the market.
||Domino's same-store sales soared 6.7% in the U.S. and
5.8% internationally in its most recent quarter from a year
Consumers have noticed the improvement and are lifting the
company's bottom line. Domino's same-store sales soared 6.7% in
the U.S. and 5.8% internationally in its most recent quarter from
a year ago. In addition, the company reported a 19% rise in
income. Domino's credits its new handmade pan pizza as the driver
for the current upswing in results.
(Full disclosure: While researching this stock, I ordered a
Domino's handmade pan pizza to see what all the hype was about. I
was not disappointed. This is a refined product that has all the
factors that make a pizza great. In this world of corporate
blandness, it's refreshing to eat something of such
In the technical picture, shares have bounced from the 50-day
simple moving average and are making an assault on the 52-week
high of $64. Shares have been in an uptrend since April 25, with
the 50-day moving average acting as solid support.
Risks to Consider:
Domino's has the risk of a competitor making a better pizza.
Consumer tastes are fickle and can change at any time. In
addition, the company is sensitive to the economy as people spend
less in restaurants during economic slowdowns. Always be sure to
use stops and position size properly when investing.
Action to Take -->
I strongly think that Domino's has cracked the taste barrier for
pizza chains. This means more consumers, after trying a Domino's
pie, will be likely to become steady customers. Therefore, I like
Domino's as an investment when the high price of $64 is broken on
the upside, or when the price drops back to the 50-day simple
moving average support level. My 12-month target is $75 on the
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