Legendary investor and Warren Buffett's mentor, Benjamin Graham, once said: "In the short run, the market is a voting machine but in the long run, it is a weighing machine."
This has been interpreted to mean that in the short term the popularity of companies with investors will largely dictate the direction that their share prices go, whereas in the long term the results they deliver will ultimately have the biggest impact.
With that in mind, I thought I would look at a couple of shares that have become largely unloved by investors to see if there's an investment opportunity.
They are as follows:
Domino's Pizza Enterprises Ltd. (ASX: DMP)
After the release of its disappointing half-year result last month, investors appear concerned that Domino's could fall short of its guidance for a second year in a row. While I think there is a risk of this happening if the performance of its Japanese business doesn't improve, I remain confident that the work being done behind the scenes will allow it to beat expectations. With the market expecting the worst, I think its shares could rally strongly if its beats expectations.
Harvey Norman Holdings Limited (ASX: HVN)
This retailer is another one that disappointed during earnings season. It reported net profit of $207.7 million for the half, down 19.3% from the previous corresponding period. This led to the board opting to reduce its interim dividend from 14 cents to 12 cents per share. I'm not convinced that things will improve for Harvey Norman in the short term and believe that this could be the first sign of its business coming under pressure from a cooling housing market and online players like Amazon and Kogan.com Ltd (ASX: KGN). Because of this, I would stay clear of Harvey Norman for the time being.
