Why do investors want a piece of the Aussie pizza franchise in 2021?
The post The Domino’s (ASX:DMP) share price is near an all-time high. Here’s why appeared first on The Motley Fool Australia. –
The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is on fire right now. Shares in the Aussie pizza franchise jumped 2.2% higher yesterday and are now just 1.4% shy of their $121.79 all-time high.
Here’s why shares in this restaurant chain with a $10 billion market capitalisation are soaring right now.
Why the Domino’s share price is near an all-time high
Shares in the Aussie pizza group are up an impressive 36.2% so far this year. That’s despite a limited number of price-sensitive announcements to the market this year.
One of those rare updates was the company flagging a new acquisition on 11 June. Domino’s announced it has entered into a binding agreement with Formosa International Hotels Corporation to acquire a 100% interest in PizzaVest Company Limited, or Domino’s Taiwan.
Domino’s Taiwan operates 157 corporate and franchised stores and is the second-largest pizza chain in Taiwan. The transaction included consideration of $79 million on a cash and debt-free basis.
The Domino’s share price jumped higher on the news back in June. That was just one good day in a relatively bullish run for the ASX 200 share since 9 March.
It’s just one part of the company’s growth strategy to expand its franchise network across Asia and Europe. In fact, according to CEO Don Meij as quoted by the Australian Financial Review, Domino’s is looking to double store numbers globally to 5,550 locations by 2031.
That includes an aggressive roll-up strategy of additional sites as many hospitality players struggle with COVID-19 restrictions. The Domino’s share price surged amid lockdowns in 2020 as the company delivered strong sales.
It looks like investors are expecting more of the same right now. The Domino’s share price has been climbing despite extended lockdown fears across Victoria and New South Wales.
That has helped to propel the ASX 200 share towards a new all-time high, even as many other shares tumble.
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 May 24th 2021
Motley Fool contributor Ken Hall 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.