Lately, I’ve not simply been in search of low-cost shares to purchase – I discovered some and have been including them to my portfolio.

One in all them is a well known, worthwhile firm with ongoing development plans – and what I see as a sexy share price.

Robust model and ongoing development prospects

The corporate in query is Domino’s Pizza Group (LSE: DOM).

To be clear, that is the London-listed firm that operates the native pizza enterprise within the UK, not the New York-listed grasp franchisor.

Domino’s enterprise mannequin strikes me as an easy one. It affords economies of scale and the corporate can hopefully exploit these extra by rising its enterprise in Britain.

It has refocussed its enterprise geographically in recent times although continues to function outdoors the UK, for instance within the Republic of Eire and Poland. However it’s the development alternatives in its greatest market which have caught  my eye.

Just by sticking to its knitting and persevering with to execute nicely on its marketing strategy, I reckon Domino’s may do nicely. Regardless that it fell 22% final yr, the corporate’s revenue after tax was nonetheless £90m. That equates to a web revenue margin of 14%.

Why I see worth

The autumn in revenue helps clarify why Domino’s made it onto my checklist of shares to purchase.

The share price has tumbled 17% over the previous yr, reflecting Metropolis nervousness concerning the enterprise efficiency. However that places it on a price-to-earnings ratio of 11.

I see that as attractively valued for a enterprise that’s strongly worthwhile, has confirmed it could actually succeed, advantages from a powerful model, and has a big buyer base. Certainly, it has been attempting out a loyalty programme with round 630,000 prospects and now plans to broaden that to roughly 3m pizza lovers.

There are dangers. Web debt is £266m. I see that as manageable however it’s larger than I would really like. Pizza gross sales may fall if shoppers tighten their belts (which might be arduous to do in each senses in the event that they eat an excessive amount of pizza!)

However I basically see this as a fairly easy enterprise that just by persevering with to do what it has been doing these days ought to have the ability to create long-term shareholder worth. Not solely am I hopeful that the share price can develop, however I additionally contemplate the 4.3% dividend yield to be engaging.

Final yr, the agency’s supply enterprise returned to development. It sees alternatives to construct on that momentum this yr, though its deal with value-based advertising campaigns barely issues me. It means that patrons are certainly feeling the pinch economically. Competing on price could be dangerous for a enterprise’s revenue margins and Domino’s profitability is likely one of the issues I like concerning the funding case.

On steadiness, to me, this share seems to be undervalued, which is why I made a decision to get a slice of the motion.