When I first opened my stockbroking account, I needed companies to add to my watchlist.
At the time I didn't know what a stock filter did, so I started searching for names of Australian companies whose services or products I knew from everyday life.
National Australia Bank Ltd (ASX: NAB), Woolworths Limited (ASX: WOW) and Domino's Pizza Enterprises Ltd. (ASX: DMP) were three of the very first companies to reserve a spot on my 20-company watchlist.
Years later, it's fascinating to know the best-performing company – by a long shot – is Domino's.
Is it time to buy Woolworths, NAB and Domino's shares?
Woolworths
Woolies is a regular feature on fool.com.au, largely thanks to the disastrous year it's experienced and its swooning share price. Indeed, with shares down more than 32% in the past year, investors have become increasingly concerned about growing competition in the supermarket space. In fact, investors must be very concerned because Woolies shares have continued to fall this week despite offering a 5.6% fully franked dividend yield and a price-earnings ratio of 13x. As we recently showed here, however, it may not be the straightforward buying opportunity it appears to be on first glance.
National Australia Bank
Relatively speaking, NAB shares have fared quite well over the past six months despite a swarm of negative sentiment sweeping over the banking space. That period included NAB's record-breaking capital raising that saw it receive $5 billion from shareholders to bolster its capital position. Indeed, it seems investors are pinning their hopes on the bank's upcoming annual report. Reporting in November, the market will be hoping NAB's management shed more light on the divestment of Clydesdale, its UK subsidiary, and the outlook for growth in domestic markets.
Domino's
Domino's has a record of proving its doubters wrong. Despite its exceptionally high valuation, Domino's shares have continued to move from strength to strength on the back of ongoing profit growth. Most recently, the Pizza franchise-cum-technology business announced a 40% profit increase and upped its dividends per share by 41%. Looking ahead, Japan, Europe and the Australian/New Zealand businesses are expected to continue firing on all cylinders thanks to its ongoing store roll-outs and increased investment in the group's digital offering.
Buy, Hold or Sell
Each of these companies is a great business and deserve a spot on investors' watchlists. However, unless you're exceptionally bullish on Domino's growth strategy, it might pay to hold off buying shares for the foreseeable future. Further, investors considering both NAB and Woolworths' shares should be cognizant of the risks before buying in.
