Fast food chains Domino's Pizza Enterprises Ltd. (ASX: DMP), Collins Foods Ltd (ASX: CKF) and Retail Food Group Limited (ASX: RFG) have been some of the best performers on the ASX over the last two years, growing 132%, 118% and 8% respectively.
All three businesses have plans which could continue to fuel growth for years to come.
Collins Foods
Collins Foods has just announced that it's going to acquire 11 KFC outlets in Germany. This isn't a huge purchase, but it's promising that Collins Foods is now looking overseas for growth.
Australia is a profitable market, but with a population of only 25 million people there is only so much that Collins Foods can grow. However, now that Europe is on the menu, this could be the start of more acquisitions.
Trading at 13.8x FY16's earnings, combined with a grossed up dividend yield of 4.18%, I think Collins Foods is trading at an attractive value for the growth that it could produce over the next few years.
Domino's Pizza
Domino's has been one of the most successful companies on the ASX over the last two years, not just in the food sector. However, its share price has declined 4% since my article about it being expensive – even with yesterday's 4.73% rise.
The underlying business should keep growing very well with its operations in Japan, France and Germany. In its latest results Domino's revealed a 43.6% growth in net profit after tax, which was very good in this era of low growth.
It currently has a partially franked dividend yield of 1.19% and a price/earnings ratio of 69.
I think the Domino's share price is still expensive compared to other growth companies like REA Group Limited (ASX: REA), but it's slowly getting closer to more reasonable levels.
Retail Food Group
Retail Food Group has successfully been growing its revenue, profit and dividend for many years now. Its latest results disclosed a 31% growth in revenue and 18% growth in the dividend.
It has a multitude of brands including Gloria Jean's, Brumby's Bakery, Donut King and others, it's also one of the largest coffee roasters in the world.
Retail Food Group has big plans to expand into China, as well as the USA with its Gloria Jean's brand. I think Retail Food Group looks attractive with its grossed up dividend yield of 6.16% and trading at 17x FY16's earnings.
Is it time to buy any of these businesses?
I think Retail Food Group and Collins Foods would be good long term buys at these prices. Both businesses have overseas markets that they can expand into for many years to come.
For now, both these businesses will remain on my watchlist during this volatile market.
