For his second "Executive Decision" segment of Mad Money Thursday night, Jim Cramer spoke with Rich Allison, CEO of Domino's Pizza (DPZ) , the pizza delivery giant that just delivered earnings that included a 13% increase in same-store sales.
Allison said he's excited not only for the increase in same-store sales, but also for the rebound in store reopenings. Momentum is building around the globe, with international sales up 11.8%.
Some 70% of all orders were digital before the pandemic began and 75% of all orders are digital now.
Allison was also excited for their autonomous delivery trials with partner Nuro in Houston. He said they give customers the option of whether to try out the new technology.
In our last review of DPZ back on Dec. 8 where we wrote that, "Normally I would say that pizza consumption is going to increase in the weeks ahead with all the sports activities on television. Despite this obvious forecast, however, the charts of DPZ look vulnerable to declines. A break of $375 would not be a good signal."
Let's see how things turned out.
In the daily bar chart of DPZ, below, we can see that the shares broke below $375 and declined further into a March low of $320. I hope that Real Money subscribers sidestepped that correction. Prices have rebounded significantly in the past seven weeks. DPZ is back above the rising 50-day moving average line and the rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line has risen from the March nadir and helps to confirm the price gains. Traders have been trading more shares on days when CAT has closed higher. The Moving Average Convergence Divergence (MACD) oscillator has narrowed in recent weeks but it is still in a bullish alignment.
In the weekly bar chart of DPZ, below, we can see a positive-looking picture. Prices are in an uptrend above the rising 40-week moving average line.
The weekly OBV line reversed to the upside in late February and has since climbed to a new (bullish) high. Last month the MACD oscillator crossed to the upside from below the zero line for a cover shorts buy signal.
In this daily Point and Figure chart of DPZ, below, we can see a potential upside price target in the $490 area.
In this weekly Point and Figure chart of DPZ, below, we can see that the software is projecting the $608 area as a potential longer-term price objective.
Bottom-line strategy: Traders could rebuy DPZ on a dip to $410 risking to $389. The $490 area is our first price target.
