The Motley Fool

FTSE 250 investing: Why I’d buy Domino’s Pizza Group’s shares now  

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.

Business development to success and FTSE 100 250 350 growth concept.
Image source: Getty Images

The Domino’s Pizza (LSE: DOM) share price is near all-time highs, marking a break from the see-saw movements seen over the past few years. I think investor bullishness on the FTSE 250 stock is here to stay for several reasons. Here’s why.

Good past performance 

Restrictions on economic activity this year meant that only a few sectors were functional. These included healthcare, supermarkets, online stores, and food delivery. It followed that their performance would have suffered less than say, real estate, entertainment, or luxury goods. Domino’s, with its leadership position in pizza delivery, has been a natural beneficiary of this trend. Even now, the pandemic is driving people’s decisions to venture out and ordering in is a safer, next-best option to eating out. 

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!

This has shown up in the company’s results. DOM’s last set of numbers, released in August, were nothing to write home about. But, they were obviously less impacted than aviation or hotel stocks were by the pandemic lockdowns. The FTSE 250 pizza company saw a 5.5% increase in revenue and, while its profits fell, it still made a profit. 

Domino’s has also continued to pay dividends. Its dividend yield isn’t notable, but just the fact that it’s still paying dividends says something about its financial health. Many companies, including FTSE 100 biggies, stopped paying dividends at the height of the pandemic either because their performance didn’t allow payouts or they anticipated hard times ahead. Not DOM. This gives me some faith in continued robust performance. 

FTSE 250 stock with prospects

Besides dividends, Dominos’ continued job creation is another sign that it’s doing well. It’s hiring 5,000 more people in the UK now. At a time when unemployment in the UK is rising, this is an impressive trend. Even with rising economy-wide unemployment though, it’s somewhat reassuring that the UK’s economy has started growing again. This is a sign for continued demand for companies like DOM.

Even though the economy’s slowly getting back on track, many sectors have been left battered by the lockdown. On the other hand, Domino’s has been able to at least maintain if not enhance its position during this time. As a result, even now it continues to look like a comparatively better investment than other stocks. 

The verdict

It’s no surprise then, that its share price has run up. There’s of course the risk of buying a stock at a high price. Except, that in this case I think there’s much room for more. As long as the pandemic situation remains uncertain, I reckon that DOM will continue to do well. I last wrote about it almost two years ago, when it was facing quite another situation. It has come a long way since, with a share price increase of over 43%. But I think there are still gains to be made. I’d buy before its trading statement is released this Thursday.  

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Manika Premsingh 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.