New Trade: Donimo's Pizza
Dominos Pizza (DMP) - The scans this morning are picking up on a few rubbish stocks turning around. None of which I would buy yet if ever. They include AYS, SGH, SRV. But one stock on the list is a stock I remain interested in despite the trend - DMP - this is a short-term Heikin Ashi chart showing the RSI buy signal with MACD likely to follow.
But the big picture is apparent on this five-year chart. There was a huge pivot point in mid-2016 and the stock has been in downtrend since. Despite that it has been quite a good trading stock despite the downtrend, and you can see that if it regained the top of the trading range you could make 20% out of it from the current price to around $50.
It is a stock in a sentiment hole but very tradable even in the bigger downtrend and, having dropped from a PE of 75x to 26.6x (dropping to 21.7x next year), it still has a return on equity of over 50%, is growing earnings at around 20%, it even has a yield these days (small one of 3.2%), is trading 16.5% below the average target price, is 38% down from the year high and out of 11 brokers nine have a buy or hold recommendation. At some point the sentiment is going to turn. Buying this for a trade now is an option on the "Big Low" happening, and if it doesn’t happen, so be it, we will be out, but it is still firmly on the “quality” watch list.