According to brokering house Wilson HTM, Domino's Pizza Enterprises Ltd (ASX: DMP), Bellamy's Australia Ltd (ASX:BAL), and Silver Chef Limited (ASX:SIV) all beat market consensus estimates during the recent interim results reporting season in February.
As a result, these three stocks have provided outperformance to shareholders compared with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over the past month. While the index has in fact declined by 1.1% in the last 30 days, Domino's has gained 3.6%, Bellamy's has soared a staggering 43.3% and Silver Chef has rallied an impressive 20.7%.
With the ASX just suffering its second week in a row of losses it looks like investors are going to have to rely on good old fashioned stock picking to send their portfolios higher from this point forward.
With regards to Domino's, Bellamy's and Silver Chef, while some investors may need some convincing that their respective multiples are justified, there are certainly reasons to remain positive about the prospects for the underlying businesses.
- Domino's: Earnings per share (EPS) are forecast to practically double from 53.8 cents per share (cps) in financial year (FY) 2014 to 106.3 cps in FY 2017 (according to Thomson Consensus Estimates). Based on that forecast the stock is trading on a forward price-to-earnings (PE) multiple of 33.4x
- Bellamy's: Reported EPS of 3.6 cps for the half year were up an impressive 71% on the prior corresponding period. Management noted in its outlook statement that the second half performance should be consistent with the first half results, which suggests that the company should achieve EPS of at least 7.2 cps for the full FY 2015. On that basis, the stock is trading on a forecast PE of 39.7x.
- Silver Chef: After a FY14 result which saw the leasing group report EPS of 43.4 cps, the outlook for FY 2016 is for EPS of 49.7 cps (according to Thomson Consensus Estimates). Based on this estimate, the shares are trading on a forward PE of 16.4x.
