We recently published a list of Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. Since Domino’s Pizza Inc (NYSE:DPZ) ranks 5th on the list, it deserves a deeper look.
Commenting on the aggressive rate cut by the Federal Reserve, Jim Cramer said in a latest program on CNBC that the “double” rate cut was needed for the economy and it would help the housing market, industrials and companies catering to the “less well-off” households.
“There really are two economies in this country. There is the one that needs lower interest rates because business is slowing and it’s harder to find a job and then there is one that says we don’t really care about where the stinking rates are. That’s who we can get a double rate cut today and still going lower.”
Cramer said he is currently in Silicon Valley and after talking to many companies, he feels tech companies do not care about interest rates since they are selling to businesses. Cramer said these technology companies are focused on innovation.
For this article, we picked 10 stocks Jim Cramer recently talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Domino’s Pizza Inc (NYSE:DPZ)
Number of Hedge Fund Investors: 52
Cramer was recently asked about Domino’s Pizza Inc (NYSE:DPZ). Here is what he said:
“Domino’s itself did screw up. They didn’t know that they had a weak franchise that was missing its numbers from overseas, and that caused people to think that wait a second maybe they are not in control of their destiny as we thought and that’s why the stock is going down and that is the actually worry for me too.”
In July, Australia’s Domino’s Pizza (NYSE:DPZ) said it will close up to 80 low-volume stores in Japan and 10–20 stores in France and anticipates flat to slightly positive store growth for the current fiscal year.
Domino’s Pizza Inc (NYSE:DPZ) shares have been posting lackluster performance ever since the glory days of the pandemic ended. While the company still expects to open about 175 net new stores per year from 2024 to 2028, it’s facing growth headwinds internationally.
So far this year the stock is down about 2%. Despite this, it’s fairly valued and investors should not expect strong growth in the stock price during the upcoming months. Wall Street expects Domino’s Pizza Inc (NYSE:DPZ) to post $16.16 in earnings per share (EPS) for fiscal 2024, giving the stock a forward price-to-earnings (P/E) ratio of 25.3x. While this is about 16.2% lower than the five-year average of 30.15x, the drop is somewhat justified as the company’s growth has slowed. Domino’s five-year compound annual growth rate (CAGR) for diluted EPS is 11.9%. Analysts’ current estimates suggest slightly slower growth.
Overall, Domino’s Pizza Inc (NYSE:DPZ) ranks 5th on Insider Monkey’s list titled Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. While we acknowledge the potential of Domino’s Pizza Inc (NYSE:DPZ), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DPZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.