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Domino’s Pizza, Inc. (DPZ), Papa John’s Int’l, Inc. (PZZA): Buying This Stock on Weakness

The competition

The competition within the quick service pizza category is stiff; everyone from the mom & pop shops to the big boys are vying for market share. Look, I despise the product portfolio of Papa John’s Int’l, Inc. (NASDAQ:PZZA) but nonetheless, let’s take a look the company. Papa John’s Int’l, Inc. (NASDAQ:PZZA) expects to open 230 to 260 units in 2013 with the majority of these locations in international markets. Earlier this year management stated it would be looking to make a dent in China by the addition of many more stores in the years ahead. With the addition of 500 location over the next five years, the company’s store count is set to nearly triple!

The more diversified quick service restaurant player, Yum! Brands, Inc. (NYSE:YUM), offers investors great exposure to both China and the quick service restaurant category. Through its Pizza Hut brand, Yum! Brands, Inc. (NYSE:YUM) in a strong position to benefit from rising demand for pizza internationally. A number of food quality problems have hurt the company’s reputation over the last year, however, the company has worked hard to re-establish its reputation. On the most recent Domino’s Pizza, Inc. (NYSE:DPZ) conference call management made it clear that rising incomes and employment are the key drivers to pizza sales as pizza is a discretionary good. Rising wage growth within China should bode well for the entire quick service restaurant category within the region.

Conclusion

I would use any weakness as a long term buying opportunity when it comes to Domino’s Pizza, Inc. (NYSE:DPZ). The company just reported a great quarter by all traditional metrics and confirmed yet again the international growth thesis. Its larger competitions have lost market share to the company over the last few years, however, they remain a threat within Asia.

The article Buying This Stock on Weakness originally appeared on Fool.com and is written by Nathaniel Matherson.

Nathaniel Matherson has no position in any stocks mentioned. The Motley Fool owns shares of Papa John’s International (NASDAQ:PZZA). Nathaniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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