Are Domino’s Pizza Enterprises Ltd shares in the buy zone?

With the Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price trading lower once again today, the pizza chain operator’s shares have now stretched their year-to-date decline to a disappointing 29%.

Will its share price rebound higher?

Considering the high level of short interest that its shares have, in the short-term I suspect that Domino’s shares are likely to trade sideways until its half-year results are released early next year.

But that doesn’t mean I wouldn’t buy its shares today with a long-term view. After all, Domino’s has bold expansion plans that will see the size of its store network more than double in size over the next eight years.

At present Domino’s has 2,135 stores in operation, but the company aims to more than double its footprint to 4,650 stores by 2025.

This store growth, its long history of strong same store sales growth, and its margin expansion plans, leads me to believe that the company is capable of growing its earnings at an above-average rate for a long time to come.

Because of this I think Domino’s is a great buy and hold investment for patient investors.

I’m not alone in this view, either. A note out of Morgan Stanley this morning reveals that its analysts have retained their overweight rating and $53.00 price target on its shares following its recent update.

The broker was surprised by the negative reaction to what it deemed to be a solid trading update and believes the lower level of store openings is down to timing rather than an underlying issue.

Morgan Stanley’s price target implies potential upside in the region of 15% for its shares over the next 12 months. I feel this is a realistic target and believe that a solid first-half and positive full-year guidance could be the catalyst to getting its shares back to this level again.

In light of this, I think Domino’s is a quality option in the industry alongside industry peer Collins Foods Ltd (ASX: CKF).

If you're not convinced on Domino's just yet then these growth shares could be just what you're looking for.

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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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