By Matt McCallMar 14, 2019
Full disclosure right up front: I’m not a pet guy.
It’s just not my thing, and I’m too busy with my work. I’m on the road today heading to a cannabis conference in Indianapolis. I’ll be in Florida next week. I’m going to China later in the year. Travel is important to my stock research, so I wouldn’t have time to have a pet even if I wanted one.
It’s not that I don’t like animals, and I don’t want to offend anyone who does. Based on the trends, that’s clearly a lot of people. At times, I’ve felt like I’m the only one who doesn’t have a pet.
According to the American Pet Products association, 68% of U.S. households own a pet. More than 60 million households have a dog, which means that one out of every two homes has a dog.
We’ll talk more about possible pet investments in the future, but I bring it up today for another reason. I want to ask all you dog owners out there… Is it true that “you can’t teach an old dog new tricks,” as the old saying goes?
I’m guessing it often is. A 10-year-old dog that has never been trained on a leash can’t all of a sudden learn how to walk calmly with one.
What about people? Is a bachelor who has been set in his ways for years going to clean up his life at the drop of a hat?
And how about investing? Can a company that has never embraced technology become a tech giant of the 21st century?
Let’s find out…
Domino’s Pizza (DPZ) started in 1963 when Tom Monaghan and his brother took over a restaurant in Ypsilanti, Michigan. They used an old Volkswagen Beetle to deliver pizzas. Fifteen years later, Domino’s had over 200 stores.
By the mid- to late 2000s, times had changed. Domino’s appeared down for the count. Sales were tanking, and its image in the eyes of the public was about as bad as it could be. The stock hit a low of $2.83 in November 2008.
Let’s fast forward 10 years. Domino’s is the world leader in pizza delivery. It operates 15,900 stores in more than 85 countries. It delivers over 2 million pizzas a day all around the world. And in August 2018, its stock hit an all-time high above $300.
If you had invested $5,000 into Dominos in the 1990s, your investment would now be worth more than $43 million!
How was such a feat accomplished? Well… this dog certainly learned some new tricks.
For starters, the company had to work on its products. It admitted that its pizza was less than stellar and addressed those issues. Personally, it’s not my favorite pizza, but there’s no denying it’s better than it used to be.
Then, it turned to something most people wouldn’t immediately associate with the pizza industry – technology.
Domino’s had already become one of the first pizza chains to offer online and mobile ordering in 2007. In 2011, its iPhone app was launched, and the Android version followed the next year. In 2015 it launched AnyWare, a technology suite that provides customers with 15 different ways to digitally order their pizza. And today, the company derives 65% of U.S. sales from digital ordering channels.
In 2018, Domino’s brought in total revenues of $3.43 billion. That means roughly $2.2 billion came in electronically.
I’d say this new trick is paying off.
But the company didn’t stop there. In 2017, Dominoes teamed up with Ford Motor (F) to test how self-driving vehicles could play a role in delivery. A second phase of the test took place in Miami last year.
Domino’s remains first and foremost a pizza company. But to get a leg up on its competition and thrive in an increasingly technological world, it also transformed itself into a tech company.
Domino’s understood that it had to get on board the tech train or get left behind.
That is something more and more “old dogs” are beginning to understand. This embracing of new technology is making a lot of stodgy old businesses interesting again.
Walmart (WMT) is one of the more recent examples. This past weekend, the company announced that CFO Jeremy King would take the stage at a conference to sell the world’s biggest retailer as a tech company.
King runs Walmart’s technology arm, Walmart Labs, which is home to many of the different technologies the company is implementing. It now uses shelf-scanning robots that take away some of the “busy work” from employees. It uses virtual reality headsets and machine learning-powered robots to quickly get online orders (specifically grocery orders) out the door. It also uses machine learning to help with supply chain.
These are the real, next-generation kinds of technologies I cover in my investment newsletters. And they represent excellent opportunities to make a lot of money as the world moves this direction.
“I’ve wanted people to understand we are building a tech organization,” said King. “We don’t get a ton of credit for being a tech company. But we have been for a long time.”
I can’t really argue with that. Can you guess who Walmart’s biggest competition is? Amazon (AMZN), the largest online retailer in the world and the beast of digital commerce. If Walmart wasn’t tech-oriented, these two companies wouldn’t be on the same playing field.
Walmart has been busy building up its e-commerce business in recent years. It bought Jet.com and Hayneedle in August 2016. It bought apparel and lingerie retailers ELOQUII and Bare Necessities in October 2018. And in December it announced the acquisition of décor retailer Art.com.
These deals have positively affected the business. E-commerce sales jumped 43% in the most recently-reported quarter. In 2018, online sales grew 40%.
Walmart probably won’t have the kind of growth and upside potential I look for in potential investments, but I give the company credit for its exposure to next-generation technologies.
I think Domino’s stock will do well over time and turn out to be a decent holding for most investors. But if you’re looking for bigger gains over the long term, there are better opportunities in companies and trends in their earlier stages of growth.
That’s not to say “old dogs” are off limits. In fact, I recommend one right now in my Investment Opportunities newsletter.
It’s below my recommended buy limit, so I can’t give away the name of the company here. What I can tell you is that it’s been around for nearly 50 years and has become one of the pioneers bringing blockchain technology to the financial sector.
The word “blockchain” is one of the most misunderstood terms in the market today. It is associated with bitcoin, and there is most certainly a connection. But the two words are far from synonymous. Bitcoin is a cryptocurrency that is based on blockchain technology. Blockchain is revolutionary. It has the potential to change the world similar to the way the internet did back in the 1990s.
I expect blockchain to change the way we do business in nearly every industry in the years ahead. It will make everyday transactions faster, cheaper, and more secure. It’s a win-win for everyone involved.
The stock has performed well for my Investment Opportunities subscribers. We’re up 20% so far. Combining the company’s strong history with future possibilities thanks to the move toward blockchain, I see plenty more upside to capture.
So… can an old dog learn new tricks? Maybe not our (or your) four-legged friends. But when it comes to old companies learning how to adapt to the future, the answer is most certainly “yes.”
P.S. I’m glad to see Walmart and the other company I recommend moving into the future. My job is to help investors get into world-changing business trends early, like the internet revolution of the 1990s. Investors made 20 times, 30 times, even 40 times their money as the internet changed the way we work and live.
We have multiple such trends right in front of us today, from the coming breakthrough in battery technology to self-driving vehicles to the exploding marijuana industry as legalization sweeps the world.
In fact, I’ve recently uncovered a tiny 73-cent pot stock insiders are saying could soon become the biggest marijuana company in the world.
With each individual share currently trading for pennies, you can own a sizable block of shares with a small initial investment. And if this tiny marijuana company grows even a modest amount… your big basket of shares could be worth millions.
For the best chance to turn a small investment into a fortune, I urge you to learn how to take a stake in this tiny 73-cent pot stock before March 21.
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