Do these two unloved ASX shares offer tasty returns?

Could Domino’s and Inghams be ideas after price declines?
The post Do these two unloved ASX shares offer tasty returns? appeared first on The Motley Fool Australia. –

Could the share prices of these two ASX shares offer tasty returns, or are these food stocks going to sour further?

COVID-19 has impacted various elements of the food economy for a long time. The share prices of these two businesses have dropped in recent months. This raises the question – are they now looking like opportunities?

Inghams Group Ltd (ASX: ING)

Inghams is one of the largest suppliers of poultry products to Australia.

Since the end of September 2021, the Inghams share price has fallen by around 18%.

Analysts like the ones at Macquarie Group Ltd (ASX: MQG) thinks that COVID impacts will hurt underlying profit in FY22. The broker thinks that Inghams’ profit could decline by mid-single digits in FY22 because of impacts like lockdowns and higher feed costs.

However, there is one broker that is very positive about the ASX share – Citi. It thinks that that the company will be able to pass on higher prices to consumers in the coming months. The broker notes that poultry volumes in Australia saw growth in the three months to September 2021, which seemingly would suggest optimistic things for Inghams.

Based on Citi’s numbers, the Inghams share price is valued at 13x FY22’s estimated earnings. Turning to the potential dividend, the broker has estimated that Inghams could have a grossed-up dividend yield of 6.6%. The price target is $4.55.

Domino’s Pizza Enterprises Ltd. (ASX: DMP)

Domino’s is one of the largest fast food businesses in Australia, as well as several other countries. It’s now in several European countries as well as Japan and Taiwan.

However, the Domino’s share price has dropped 29% since the middle of September 2021.

The broker Morgans has a price target on the fast food business of $135, which suggests a potential increase of the Domino’s share price of around 15% over the next year.

In a trading update released at the annual general meeting (AGM), Domino’s said that in the first 18 weeks of FY22, network sales were up 8%, with same store sales (SSS) rising by 4.3%. Domino’s called this growth strong during difficult and uncertain times.

However, sales growth has been uneven across different regions. Japan was seeing negative sales after lockdowns ended, meaning it may not beat FY21’s Japanese earnings in FY22. However, Japanese store openings remain “very strong”.

The ASX share is planning to add a record number of stores in FY22, by adding the equivalent of more than one store each day.

The company is experiencing inflation in a few of its cost areas including energy and food.

Its three to five year outlook was unchanged, with same store sales growth of 3% to 6%, new store openings of 9% to 12% and net capital expenditure of between $100 million to $150 million.

Looking at broker expectations, the Domino’s share price is valued at 50x FY22’s estimated earnings and 41x FY23’s estimated earnings. The current rating on Domino’s by Morgans is a hold.

The post Do these two unloved ASX shares offer tasty returns? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Domino’s right now?

Before you consider Domino’s , you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Domino’s wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

2 fantastic ASX growth shares Goldman Sachs rates as buys

Two inflation resilient ASX 200 shares revealed: fund manager

Domino’s (ASX:DMP) share price dips despite “important” milestone in Japan

ASX 200 (ASX:XJO) midday update: Sydney Airport takeover update, Santos falls

3 fantastic ASX growth shares to buy right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!