These three stocks have made excellent gains since the beginning of the year, and I want to explain the reasons for that success. Keeping up with a stock’s story is how investors understand what more is to come.
Domino’s Pizza Enterprises Ltd (ASX: DMP) has made changes to improve sales and products. Online ordering has increased to about 60% of all sales in Australia, freeing up workers to make pizzas and streamlining orders. The new website format shows menu selections and customer orders in an easy way through to the checkout.
New products like its “Chef’s Best” line of gourmet-style pizza are gaining popularity, with about 25% of all orders including one item from the range.
Store growth in ANZ is high, adding 25 new stores in the first half of FY2014, and same store sales were up 5.6% during the period. Same store sales were best in Japan up 7.8%. Since it took a 75% stake in Domino’s Pizza Japan, 21 new stores were opened in September to December, and TV ad campaigns in Tokyo and Osaka are driving sales growth.
The share price has gained 28.5% in the past two months, and set a new all-time high of $21.92.
Newcrest Mining Limited (ASX: NCM) has been enjoying higher gold prices, and shareholders gained 39.4% in share price to $12.02 since early January. Gold prices touched US$1,350 this week, and the price is US$1,347 currently.
Whether spot prices keep rising from here is difficult to say, but with the changes that Newcrest has made in the first half of FY2014, all-in sustaining costs for gold production at all of its mines are now below its average realised sale price, and overall production was pushed up 27%. Widening volumes and price spreads add up to more potential earnings.
Investors need to monitor how long it can maintain lower production cost and keep an eye on gold prices. Recent political events in the Ukraine may move the price somewhat, but watching gold consumption in China and India, the two biggest importers of the yellow metal, may be more insightful.
REA Group Limited (ASX: REA) was added to the S&P ASX 100 Index (ASX: ^XTO) today. The owner of realestate.com.au, the number one online real estate listings portal in Australia, climbed 39.7% from $37.26 to $52.05 in two months.
Capping off a spectacular run-up in share price since July 2012, the addition to the index will allow more institutional investors to buy shares. With half-year increases in revenue and profit up by 30% and 37% respectively, the growth will attract a lot of attention.
It is expanding into the international markets of Europe and Asia, but the big growth is here in Australia, as it adds more services that property hunters and sellers want.
Seeing what these companies have in store over the next year explains the share price gains. Staying up-to-date with how successful they are in keeping the stock story going is one of the best guides for future returns.
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Returns as of 6th October 2020
Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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