Pizza and stereo speakers still good for growth
The stocks of Domino's and Harman remain terrific despite some recent setbacks.
So let's see. Domino's (DPZ) and Harman (HAR) are now dead stocks? The fact that they opened up and then fell flat is the kiss of death, too, as if they are somehow software-as-a-service stocks or 3-D printers or biotechs?
Thursday night I interviewed Patrick Doyle of Domino's and Dinesh Paliwal from Harman, and I have to tell you that I think the action in their stocks, which were full of the sound and fury, actually signified nothing.
This wasn't the first time that Domino's has reversed like that in the 70-point run since I met Patrick Doyle, one of my bankable 21 from "Get Rich Carefully." In fact, this stock has had some major problems getting by earnings days, in part because Doyle is so candid about his business. Thursday, he dropped a bomb about raw costs, particularly for cheese, which has gotten a little out of control. But he has a largely franchise model and that price falls to the franchisees for the most part -- they do have some company-owned stores that get hit -- and otherwise the growth here was superb and the cash generation better than ever.
I know this tape has sewed so much confusion with its interaction with the bond market. I think this stock reversed in part because interest rates reversed and headed lower. Plus, when it comes to commodities, what goes up can come down. I simply don't believe the 25 percent move higher in dairy in the last quarter is sustainable, while I do believe the mid-single-digit comps here and the high-single-digit comps overseas are.
Harman is tougher. The action in the stock is mystifying. It opens at $114, a gap up of about 5 points, then cascades 12 points down an hour before the conference call begins. Again, all I can find that disturbs the stock is the bond market, as there was nothing substantive affecting Harman in that period. No earnings notes. No new stories.
Then the conference call begins and the stock works its way back to where it is, slightly in the black from the day before the call. Finally, it rolls over to close down a couple in that last-minute ugliness.
Did we hear Harman say anything bad about its business? Nope. All three divisions -- professional, such as sound for shows like the Grammys; personal, such as the fabulous at-home speakers; and headphones and the auto infotainment segment -- are doing much better than analysts thought. Yes, there was a gross-margin in issue in one small line of business. More importantly was that the company has won a huge number of orders from auto companies worldwide and once they are in they are very difficult to dislodge. When we checked around to see if there is anything that we might be missing, we heard that some thought Apple (AAPL) would challenge them with an in-car system.
I found that absurd. Although I can see that their recent partnership with HTC might be annoying to Apple, there are many things that are annoying, and let's just say it isn't what's driving the stock.
Both have huge moats. Harman is embedded in pretty much every car company in the world. Domino's has harnessed social media, notably Facebook (FB), to generate a huge number of digital orders, which has been a terrific way for the company to take share in the competitive pizza delivery market. The moms and pops just don't have the horses.
Now, of course, when you have these island reversals, the stocks are now being consigned to the dustbin. I am totally cognizant of that. These two need to stabilize, especially because all of the hot money that came in on the opening has got to be flushed out.
And while I am sure there are things that I am missing, I think these two stocks, so fabulous for so long, remain terrific places for growth investors to be in. They have the best managers, the most consistent sales and earnings profiles, and among the best order momentum -- pizzas and infotainment -- of the vast majority of companies I follow.
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"""I simply don't believe the 25% move higher in dairy in the last quarter is sustainable"""
yes, all New Yorkers feel anything west of their city line ~ like that pesky drought west of the Mississippi, have nothing to do with their world!
expect meat, milk, veggies, etc, all to go up until there are several years of non-drought rain levels. Lake Meade is several hundred feet below it's old "normal" level.
Yup, "Climate Crisis" and "Climate Change" sounds like Global Warming to me....
Remember it's not about the "CHANGE", it's about HOW FAST, it's happening....
Old Al , had something there...IMO.
If you had been living in the country for 45 years or were very close to Nature or had a career mostly working outside; You may have noticed it a lot more.
Every time a Cow farts.....We lose a little fresh air to breathe...
But I still don't understand that Butterfly Wing-Flapping thing yet....
Well Mick, unfortunately that's the way it's been "again" for a couple years...(at least).
Of course, the only thing I can say about ol' Tom Monaghan's past Company is don't step off the curb, when one of the delivery vehicles is coming down the street...
And kind of think Tom went off the rails a few years back, some of my family had dealings with him.
But I think he is an okay Joe...just nuts.
Hope this helps...
It's actually kind of funny to watch the Fed backing out of QE and now looking more seriously at the interest rate all because of spun information. Wall Streeters crapping their pants because they don't know what to do really.
It's kind of like Little Beav asking his left hand.... "Honey will you take care of me tonight?" .. only to have it slap him upside the head.
There are "Good Guys" down on the Trading floor....?
That ought to make for a good Movie Script..
Don't get stuck on a Bridge, trying to get out of that shidthole Jersey, and getting into the City..
Mankind, Is having a long term reaction on our Atmosphere..
And Yes, the Sun has bearings on the Planets also..
We have went through cycles over the Eons, caused by Natural Events and Interplanetary reactions.
Such as Volcanic activity, and Plate movement..
Along with Impacts and Collisions...That is not what is affecting us today...
And yes anyone or body, can "parade out" their "so called" experts on EITHER SIDE...
Well a decent day in the Markets today....But it's been a fantastic week in several equities....
And a pretty good week in the Markets....
About an hour to go and not much is going to change...So this is your closing report...
It's nap time...
Have a nice weekend...!!
ps....Sure that Ice Cold has been watching COP, looking pretty sweet; More to come..
We made some good decisions.
And now a word from Papa John's.....
YUMM and Happy weekend all!
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