The Motley Fool

Frankly I’m not tempted by either of these pricey FTSE 250 stocks

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Close-up Of Wooden Blocks With Risk Word In Front Of Businessperson's Hand Holding Magnifying Glass
Image source: Getty Images

Home delivery chain Domino’s Pizza Group (LSE: DOM) was up 6% in early trading after today’s Q3 trading statement said it continues to grow in the UK and Ireland, but has made the tough decision to exit less profitable overseas markets.

Domino’s effect

UK system sales rose 3.9%, a performance the group described as “solid”, with sales in the Republic of Ireland up 2.4% in local currency terms. The group continues to expand, opening 12 stores in Q3, while online sales also grew at a healthy pace, up 7.2% in the UK, and 9.9% in Ireland. Online now accounts for 90.9% of delivery sales.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Management has reviewed its international markets, which include Switzerland, Iceland, Norway and Sweden, and decided to exit them “in an orderly manner.” That’s bad news for delivered pizza lovers in Oslo, but outgoing CEO David Wild concluded that whilst they represent attractive markets, we are not the best owners of these businesses.”

That seems to make more sense than battling on in the face of “disappointing” international system sales, which were “flat year on year in local currency and down 2.7% on a reported basis in Q3.”

Wild and woolly

Domino’s has also been caught up in a bitter dispute with franchisees over their share of the company’s profits, rumoured to have been worsened by Wild’s hard man tactics and, today, he said a resolution would take time, with no settlement before 2020.

In August, the Fool’s Paul Summers noted that Domino’s no longer holds a net cash position, but instead has net debt of £239m. That doesn’t seem too onerous for a business with a market-cap of £1.29bn. But I’m deterred by its forecast valuation of 17.9 times earnings, for a stock that’s trading 20% lower than three years ago.

Domino’s is an established brand but faces plenty of competition in a crowded home food delivery market, and has serious internal issues to resolve as it wave goodbye to the Wild times. I think you can find better opportunities elsewhere, such as these two Brexit-proof stocks.

Bother for the Brothers 

Fund manager Rathbone Brothers (LSE: RAT) is having a bad time of it with its share price down more than 10%. That comes as investors recoiled at today’s trading update, with its key Investment Management arm suffering net investor outflows in a “difficult market for savings.”

Total funds under management did rise 4.4% year-on-year to £49.4bn at 30 September, over a period when the FTSE 100 fell 1.4%, while gross quarterly organic inflows in Investment Management “remained resilient” at £800m, same as last year.

However, net quarterly outflows in Investment Management totalled £200m, against net inflows of £6.9bn last year (mostly down to acquiring Speirs & Jeffrey). Today’s interim statement blamed “ongoing weak investor sentiment and investment manager departures,” together with anticipated outflows from short-term discretionary mandates.

Worse, this is expected to continue to weigh on net growth in funds under management and administration in 2020 too.

Today’s volatile markets are tough for asset managers, and they will get tougher if the global economy continues to slow. The Rathbone Brothers share price has grown a third over the last three years, but today’s pricey valuation of 18.3 times earnings hardly tempts, while the 2.9% forecast yield isn’t enough compensation.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Domino's Pizza. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.