Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 124

Why global? More choice and cheaper pizza

Going global gives you choice. Just like buying online you get more items at cheaper prices. Your portfolio will benefit from trends and industries that are not available in Australia. The local market is heavily weighted to banks and resources, otherwise known as the two options of debt or dirt. With the mining boom winding down, investors have to look offshore for growth.

The majority of the disruption we see every day is benefitting companies overseas at the expense of our past market darlings. We can see what has been happening in stocks like Fairfax and Channel Ten. New media like Facebook and YouTube are taking eyeballs and attention away from old media. The rivers of gold from print advertising can now be found online. There are some disruptive stocks in Australia that are benefitting, like realestate.com.au and Domino’s Pizza. But they trade on expensive multiples because of the scarcity of these investments in Australia and the weight of superannuation money. The amount of money in superannuation is larger than our domestic stock market. If we look overseas these same trends can be accessed at much cheaper prices.

Which pizza would you choose?

Domino’s Australia (ASX:DMP) has been a great outperformer in the local market but there are four other listed Domino’s companies around the world. All four pay a royalty of 3.1% to the US company which owns the brand, yet Dominos in America (NYSE:DPZ) trades at a one-third Price/Earnings multiple discount to the Australian-listed Dominos. Investors get access to the brand owner at a cheaper price because it’s listed overseas where the choices are greater which makes for cheaper valuations.

Digital ordering

Going global gives you options. We have seen how popular Domino’s has become with digital ordering. Large restaurant chains have benefited tremendously as smart phones allow ordering on the go. Domino’s mobile application even tracks the driver so customers can watch real time as the driver decides which street he is going to take!

Being global you can apply this trend elsewhere. I personally see a similar opportunity in Starbucks as they roll out digital ordering this year in their 13,000 US stores. It’s great ordering coffee ahead – there’s no waiting in line. The app will ask whether the customer is driving or walking to better estimate when the coffee should be ready at the closest store. The introduction of drive-through at Starbucks grew revenue incrementally by 50%. Digital ordering will have a significant impact decreasing lines while increasing sales at peak hour. Like Dominos, once the Starbucks app is downloaded, orders are customised and saved on the phone.

Access to trends

Going global gives exposure to other trends like electronic payments. Customer purchase behaviour has changed every day at stores. How often do you see customers use tap and go with their Visa and MasterCard debit cards? I hardly carry any cash around anymore. I’ve even forgotten my password a number of times as I’m so used to tap and go.

When we purchase on the internet we don’t use cash we use PayPal and our credit cards. They are great businesses clipping the ticket on every transaction. Electronic payments is such an important trend that Monopoly has produced a version of its game without cash, just debit and credit cards. Though I have to admit holding the cash in the original version is a lot more fun.

Access to brands

Many of the brands we use everyday are listed overseas, especially the majority of growing brands revolving around technology, like Google and Amazon. Brands have historically been good investments as they have pricing power. How often do you see Starbucks dropping its coffee prices when prices of beans go down? Compare this to commodity companies like BHP which have to take whatever the market pays. Of the top 100 brands measured by brand value, only five are from Australia (source: Brandz).

Invest in companies that ‘buy commodities, sell brands’

Warren Buffet has become widely successful, mainly because of four words: “Buy commodities, sell brands”. He invests in companies like Coca-Cola. Brands tend to be durable investments as customers seek them out as they know what to expect from the product and service. Apple is a modern day brand example. The semi-conductor chips they buy are commodities but their services and high quality brand differentiates them from competitors allowing them to charge high prices for their products.

We should be more comfortable with these foreign companies. How often do you buy something from BHP? We all have Apple iPhones (it has been estimated we look at our phones 214 times a day) but hardly anyone in Australia buys the shares.

Global provides more options at cheaper prices

Going global gives you access to more items at cheaper prices. You can benefit from all the brands and trends you see every day. Because there are so many disruptive companies investors have plenty of choice leading to better valuations than if they were listed here in Australia. As investors we have figured out it is better to put our money in bank shares rather than bank deposits but what about other trends like ordering over the internet and electronic payments? In Domino’s case, going global gives you a higher quality pizza at a cheaper price.

 

Jason Sedawie is a portfolio manager at Decisive Asset Management, a growth-focused global fund. Decisive owns shares in Domino’s Pizza (DPZ), Starbucks (SBUX), PayPal (PYPL) and Visa (V). This article is for educational purposes only.

 


 

Leave a Comment:

RELATED ARTICLES

Four ways to determine your international equities allocation

Don't believe the SMSF statistics on investment allocation

Three fascinating lessons overlooked by investors

banner

Most viewed in recent weeks

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Getting rich vs staying rich

Strategies to get rich versus stay rich are markedly different. Here is a look at the five main ways to get rich, including through work, business, investing and luck, as well as those that preserve wealth.

Latest Updates

SMSF strategies

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Superannuation

The huge cost of super tax concessions

The current net annual cost of superannuation tax subsidies is around $40 billion, growing to more than $110 billion by 2060. These subsidies have always been bad policy, representing a waste of taxpayers' money.

Planning

How to avoid inheritance fights

Inspired by the papal conclave, this explores how families can avoid post-death drama through honest conversations, better planning, and trial runs - so there are no surprises when it really matters.

Superannuation

Super contribution splitting

Super contribution splitting allows couples to divide before-tax contributions to super between spouses, maximizing savings. It’s not for everyone, but in the right circumstances, it can be a smart strategy worth exploring.

Economy

Trump vs Powell: Who will blink first?

The US economy faces an unprecedented clash in leadership styles, but the President and Fed Chair could both take a lesson from the other. Not least because the fiscal and monetary authorities need to work together.

Gold

Credit cuts, rising risks, and the case for gold

Shares trade at steep valuations despite higher risks of a recession. Amid doubts that a 60/40 portfolio can still provide enough protection through times of market stress, gold's record shines bright.

Investment strategies

Buffett acolyte warns passive investors of mediocre future returns

While Chris Bloomstan doesn't have the track record of his hero, it's impressive nonetheless. And he's recently warned that today has uncanny resemblances to the 1990s tech bubble and US returns are likely to be disappointing.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.