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How You Can Bank on Domino’s Pizza for Contactless Profits

Deliveries may become a very relevant business for DPZ stock

Personally, one of the trivial consequences that I experienced from the novel coronavirus was constrained access to fast-food eateries. Yes, cooking at home is better for you health-wise and certainly more palatable for your wallet. But sometimes, you just want a slice of fresh-out-of-the-oven pizza. And while I wouldn’t consider Domino’s Pizza (NYSE:DPZ) as the benchmark for culinary satisfaction, I can’t argue with DPZ stock.

How You Can Bank on DPZ Stock for Contactless Profits
Source: Ken Wolter / Shutterstock.com

However, if we’re just talking about mainstream pizzerias, I prefer Papa John’s (NASDAQ:PZZA). Lately, I’ve been dying for some good ole American junk food. Sure, quarantine crackers are great, but it gets old. Therefore, I finally got over my apprehensions and placed a big order with Papa John’s — the first time I did so in years.

What convinced me to take a shot was Papa John’s contactless delivery. The delivery driver places your order at your doorstep (protected by a floor cover), knocks on your door and then steps back six feet. You pick up your order, and the driver retrieves the cover after you close your door.

In this new normal, it’s a perfect way to enjoy pizza without the fear of infection. That said, Domino’s utilizes an identical process, which I believe is a plus for DPZ stock.

Frankly, what prevented me from ordering fast food was fear that people would spit on my order. It’s one of the reasons why I deliberately avoided spending too much money on mainstream American businesses during the lockdowns.

If businesses treat me or my community members poorly, I won’t give them money — simple as that.

Finally, though, with America gradually reopening, I and millions of others are returning to some semblance of normal. And DPZ stock is in a great spot for the coming paradigm.

DPZ Stock’s Position

Despite the reopening measures, and the heightened emotions of the coronavirus — particularly the desire to seek a scapegoat — declining, DPZ stock isn’t without criticism. For one thing, its technical posture seems to indicate that shares are stretched.

Certainly, I’m not too eager to buy at the present price point. However, if DPZ stock encounters a correction, I may have to consider a long position.

Primarily, I don’t believe that most Americans are ready to mix it up with strangers. Over the weekend, I did something that I haven’t done in a while: spend hours walking around in public. You don’t realize how critical sunlight is to your overall health until you are deprived of it for months.

But during this walk, I noticed that almost every person I encountered was leery about close contact with others. Forget maintaining distances of six feet — these folks were going for six yards!

Of course, I’m not asking you to assess DPZ stock based on my anecdotal observation. Instead, consider the overwhelming evidence that the pandemic has at least temporarily changed the psyche of the American public. For instance, the New York Times reported that many workers are refusing to go back to their reopened jobs despite the obvious consequences.

If you’re willing to risk your income during an unprecedented recession, that tells you all you need to know about coronavirus fears. Again, we’re just not ready for a full-scale return.

However, Domino’s simple but innovative approach is a reasonable intermediary. While we’re probably not going to pack into a restaurant anytime soon, we’ll consider food deliveries. And because many people are prioritizing health over all other concerns, the extra cost associated with deliveries is apparently a burden customers will gladly accept.

Domino’s Is a Cheap Respite

Another factor that could support DPZ stock over the intermediate to long term is that the underlying business represents a cheap treat. Although the May jobs report produced a stunning result — adding 2.5 million jobs instead of losing millions — the details suggest that we’re far from out of the woods.

Most worryingly, President Donald Trump’s administration seems to be celebrating off a misguided narrative. And with the restaurant and hospitality industries bearing the brunt of the coronavirus damage, it makes sense that as states reopen, some of those jobs would return. However, we can’t lead an economic recovery because we have a robust base of waiters and bartenders.

That tells me that labor market is much worse than the headlines suggest. Therefore, I’m not angling for retailers dependent on high-dollar purchases. But Domino’s? Most consumers should be able to spare a few bucks for pizza, and it may provide some emotional relief from an otherwise terrible situation.

Overall, the fact that Domino’s will deliver this relief safely makes DPZ a reasonable bet in our new normal.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/06/how-you-can-bank-on-dominos-pizza-for-contactless-profits/.

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