In this section we provide readers with three stocks that have attracted the interest of the broking community or the ‘herd’. Broker recommendations tend to be biased and highly optimistic. We try and breakdown these barriers and give our own honest opinion. It is important to keep in mind that technical analysis is only one part of the investment process and any recommendations do not give consideration to the underlying fundamentals of each business. Domino’s Pizza (DMP) – $42.18 – Reaffirmed NPAT guidance of in the region of +20% driven by menu innovation and operational improvements, adding sales in all markets and delivering higher Half Year earnings for the Group. Here are the dot points: Network sales for H1 increased +7.1% (+$82.8m) on the prior corresponding period (pcp) to $1,248.9m, +4.0% on a Same Store Sales (SSS) basis. NPAT of $62.9m up 7.0%. Group Revenue of $567.6m. Expanded store network 2,193 stores at H1 end Interim dividend of 58.1c (40% franked) up +20.0% on the interim dividend paid in the pcp. Broker View:  UBS (BUY $57.50) – The broker says the result was 9% below its expectations on lower margins in Europe and Japan even though sales met expectations. Second half trends suggest improvements. The company enjoy good market share in Australia and New Zealand. Buy remains. Unconventional View: We disagree with UBS. This was a disappointing result on all fronts and the stock was hammered as a result. DMP is down 14.1% since its result. The result was the weakest 1H profit growth since 2007. Underlying NPAT came in at $62.9m which was a miss on the $70m the market was expecting. Network sales rose 7.1% to $1.24bn supported by 58 new stores. Same store sales rose 4%. But DMP did give guidance for underlying NPAT to fall in the area of 20% in 2018. We doubt DMP will reach this target. The market also doubts DMP will achieve FY guidance and is concerned the days of solid double digit growth is all but over. That’s the reason its shares are spiralling downwards. Citi says earnings need to be up by 29% in the June H just to meet this guidance. It considers the profit growth of 20% to be a long stretch and agree. A rebound in the 2H is highly unlikely. Expect more of the same. Another profit downgrade on the way. The stock is also heavily shorted, which exacerbates the recent fall and may continue to do so going forward. Whilst all DMP needs to go is put out a good result and its shares will run, we don’t think it can do that for quite some time. Management has flagged that growth will be skewed…

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