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2 long-term winners to watch in ASX reporting season

The ASX reporting seasons are always an exciting time of year. A lot of companies with 30 June and 31 December balance dates will release their half-yearly reports and preliminary final reports, respectively, by 28 February. The reporting periods are a great time to review your portfolio and watchlists with the most up to date information. Although most brokers can alert you to price sensitive information, it is worth checking to see when the stocks you own will be reporting.

Here are 2 of the decade’s best performing S&P/ASX 200 (INDEXASX: XJO) stocks to watch this February reporting period.

Domino’s Pizza Enterprises Ltd. (ASX: DMP) 

Domino’s key numbers:

  • $4.89 billion market capitalisation
  • 42x price-to-earnings ratio
  • 2.08% dividend yield, excluding franking credits.

The company is Domino’s Pizza Inc. (NYSE: DPZ)’s largest franchisee outside of the USA. It holds the master franchise rights to the Domino’s brand and network in Australia, New Zealand, Belgium, France, The Netherlands, Japan, Germany and Luxembourg. 

The past success of Domino’s, as well as its future prosperity, relates to 3 things: quality ingredients and pizzas; innovation in technology; and a growing store base. Two items of focus this reporting period will be same-store sales growth and store growth data, both of which help drive earnings over the long-term.

Goldman Sachs analysts have  lifted their price target on Domino’s to $60.50 and retained their conviction buy rating. After reviewing online data, Goldman expects Domino’s store network to increase by 8.2%, rather than 7.6%. Global expansion should drive strong earnings growth over the coming years. 

It’s also worth keeping an eye out for news on the Federal Court litigation between the company and a Perth franchisee.

Jumbo Interactive Ltd (ASX: JIN) 

Jumbo’s key numbers:

  • $982 million market capitalisation
  • 37x price-to-earnings ratio
  • 2.32% dividend yield, excluding franking credits.

Jumbo sells online lottery tickets and operates the Oz Lotteries website.

The company provided a December guidance change for a slowdown in profit growth in the first half. Jumbo now expects 13% profit growth compared to 24% revenue growth, which was a result of increased business development costs. This guidance update disappointed the market and led to the stock falling 25.2% in December. Despite this, analysts at Morgan Stanley maintain an overweight rating with a price target of $21.00. 

With a long-term growth story and the company’s earnings before interest, tax, depreciation and amortisation margin expected to return to previous levels in FY21, shares in Jumbo appear to be a good long term buy. With a recent change in guidance, the market has specific expectations for the stock, so a material variance to the guidance could see some volatility in the stock price.

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Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinion. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited and Jumbo Interactive Limited. 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 Scott Phillips.

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