Delivering the Dough

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Markets resumed their upward march, with the Dow Jones up 1.58%, the S&P 500 rising 1.81% and the NASDAQ gaining 2.95%. The MCSI Emerging Markets Index also rose 2.37%.

Big gainers in your Bull Market Alert portfolio included the iShares MSCI Emerging Markets (EEM), which moved 2.37% higher, and the iShares MSCI Ireland Capped (EIRL), which added 3.18%. All current positions are a “Buy.”

This week’s Bull Market Alert recommendation, Domino’s Pizza, Inc. (DPZ), is also a stock that has been on a roll.

Shares are up 19.97% year to date versus the broader S&P 500’s gain of only 1.5%.

The reason?

The company’s fourth-quarter earnings in late February blew away expectations, and the stock promptly popped 13%.


Specifically, Domino’s reported a fourth-quarter 10.7% domestic same-store-sales growth figure and earnings per share (EPS) growth of a whopping 26.4%. Analysts promptly increased their consensus EPS expectations for the first quarter from $0.95 per share to $0.98. A big short squeeze in the stock no doubt helped as well.

Domino’s is certainly in expansion mode both in the U.S. and abroad. Last year, the company added 133 domestic stores, the highest number it has opened in 15 years. Tellingly, 88 of those stores were opened in the fourth quarter, reflecting strong growth in the United States.

Still, most of Domino’s growth is coming from overseas, with international store count figures growing by 323 in Q4 and 768 in the full year. Overall, the company grew its store count nearly 8% last year to 12,530 total restaurants.

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As a growth stock, Domino’s is firing on all cylinders, even though the stock has done little in the past month. And therein lies the opportunity. While most of the market is overbought, Domino’s stock still offers the chance to get in at technically oversold levels.

With the company announcing earnings on April 28, I think it’s a good bet company to report another blowout quarter leading to yet another big pop in the stock.

So buy Domino’s at market today and place your stop at $128.00. If you want to gamble on profiting from a possible pop, then I recommend the May $140 calls (DPZ160520C00140000), which last traded at $2.50 and expires on May 20.

Portfolio Update

United States Oil (USO) fell 7.26% last week. Oil prices moved lower last week after two of the largest oil players in the Middle East seemed unable to see eye-to-eye. Although Saudi Arabia is open to freezing oil output in an effort to stabilize (or even boost) prices, they will only do so if other major oil producers such as Iran do the same. Oil-producing nations will meet on April 17 to explore joint pricing options. With oil now technically oversold and due for a bounce, USO remains a BUY.

iShares MSCI Emerging Markets (EEM) moved 2.37% higher last week. EEM traded above the 200-day moving average (MA) last week for the first time since June 2015. The first quarter of 2016 also saw a remarkable turnaround for the long-suffering EEM as this emerging market exchange-traded fund rose nearly 9%. EEM’s subsequent behavior at the 200-day MA should yield additional clues quite soon on future gains. EEM is a BUY.

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iShares MSCI Ireland Capped (EIRL) added 3.18%. Like EEM, EIRL also pushed above its 200-day MA last week — and it did so with a mighty pop in volume last Friday. This Ireland-based exchange-traded fund now stands very near its $40.50 price level — a price just 4% away from its 52-week high. There seems to be nothing standing in the way of EIRL making this level once again in the weeks ahead. Once there, the door will be opened for future significant gains. EIRL is a BUY.

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Nicholas Vardy

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