In today’s daily we have covered stock research on
Dominos Pizza (Expensive). To view list of dividends
click here
To listen to our latest
podcast click here.
S&P 500 was up 4.21points or0.22%on Tuesday and closed at 1941.99 U.S. stocks rose modestly on Tuesday afternoon, recovering from morning declines though investors kept watching the turmoil in Iraq as the Federal Reserve began a two-day policy meeting. The latest economic data showed that housing starts and building permits fell more than expected in May, though the overall Consumer Price Index rose 0.4 percent, the biggest gain in more than a year.
Among Asian stock markets the Nikkei 225 in Tokyo rose 0.3% but the Shanghai composite fell 0.9%, its biggest one day drop in a month.
Gold was down $1 at $1270 an ounce. With energy prces now on the rise due to heightened geopolitical risks and tight global supply of crude oil, some increases in retail gasoline prices in the months ahead look probable.

S&P 500 Daily Chart (Source – Thomson Reuters)
S&P ASX 200was down by 11.6 points or 0.21% on Tuesday and closed at 5400.7 points. South African retailer
Woolworths has secured shareholder approval to proceed with its $2.2 billion takeover of
David Jones.
Royal Dutch shell has reduced its stake in
Woodside petroleum to 13.6%. With iron price falling 34% this year,
Fortescue Metals is offering the highest discount since GFC to Chinese steel mills.
Isentia Group announced the substantial shareholding of
CBA with a voting power of 7.30%.
OZ Minerals announced the substantial shareholding of
NAB with a voting power of 5.29%.

ASX 200 Daily Chart (Source – Thomson Reuters)
The
top gainers on ASX 200 were:-
Stock of the Day – Domino’s Pizza (DMP)
DMP recently appointed Jack Cowin to its board as chairman. We view this appointment as a very strong addition to the board. He brings 45 years of experience in the Australian quick service restaurant industry. He is an industry doyen , owning Hungry Jacks (the burger king franchise in Australia) and previously owning the KFC franchise rights in Western Australia

Domino’s Store (Source – Company Reports)
He strengthens an already exemplary board and management team, which has strong experience in food retailing and entrepreneurship, which is highly relevant to Domino’s strategy of rolling out new stores and expanding overseas. A family trust structure set up by the chairman holds more than 18.5 million shares (or 27.8% of the company). The stock is currently overvalued as the market assumes a more optimistic store rollout in Japan and Europe than management’s long term targets.

DMP Financial Highlights (Source – Company Reports)
Despite domino’s emerging leadership in the fast casual restaurant category, we maintain it does not have many competitive advantages as fast casual restaurants do not have any switching costs with intense industry rivalry and low barriers to entry. Longer term Domino’s may develop significant competitive advantages but that is likely to take more than a decade.
DMP daily chart (Source – Thomson Reuters)
It is possible that the offshore strategy succeeds faster than expected, rapidly increasing returns on capital and strengthening the case of having the competitive advantage being the low cost provider. As a brand promoter and marketer Domino’s conducts extensive advertising and promotional campaigns. It is conceivable that the brand equity develops to a point where the company can charge a premium.We believe the stock is slightly expensive at its current price and would review the stock at a later date.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.