Hungry for returns? Are Dominos or Guzman y Gomez ASX shares a better buy in 2025?

Pizza or burritos? Why not both?

| More on:
A smiling man take a big bite out of a burrito

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Comparing ASX shares from two of Australia's favourite fast/casual food chains is a mouthwatering proposition. 

But after looking past the cheesy, meaty goodness, these ASX shares appear to be more different than alike. 

Guzman y Gomez Ltd (ASX: GYG)

Market capitalisation: $4.02 billion

Guzman y Gomez has come a long way since its first store opened in Australia in 2006. It now operates more than 220 restaurants in Australia, Singapore, Japan, and the United States. 

However, the Mexican fast-food company only listed on the ASX in June 2024. Its initial public offering (IPO) of $22.00 per share raised eyebrows as some analysts labelled it as overpriced. 

Investors were apparently less concerned, as trading closed on the first day at $30.00 per share. 

Since then, it has been (mostly) smooth sailing for shareholders, with Gusman y Gomez shares increasing 82.2% since their ASX debut. 

GYG shares briefly hit a high of almost $45.00 apiece in December. 

Created with Highcharts 11.4.3Guzman Y Gomez PriceZoom1M3M6MYTD1Y5Y10YALL1 Jun 20248 Jan 2025Zoom ▾Jun '24Jul '24Aug '24Sep '24Oct '24Nov '24Dec '24Jan '25Jul '24Jul '24Sep '24Sep '24Nov '24Nov '24Jan '25Jan …Jan '25Jan …www.fool.com.au

How high can a burrito fly?

After such a strong start, it's no surprise some were happy to take their guac-covered profits and run. 

QVG portfolio manager Chris Prunty sold off his shares last September despite being one of the backers of Guzman y Gomez during its IPO. 

Meanwhile, analysts at Morgans suggested the GYG share price could reach $62 apiece in the long term. 

This prediction was largely based on GYG's potential expansion to more than 500 stores in the United States. 

And it would coincide with the company's current goal of having 1000 stores in Australia over the next 20 years. Here's what the company had to say in its GYG FY24 Performance Report:

In Australia, GYG is targeting to open 30-40 new restaurants per year over the long term and believes there is the opportunity locally for the company to expand fivefold, given the strength and demand for GYG's offering.

Long-term estimates on the company are mixed, depending on where you look. But the GYG share price has marched forward despite experts' hesitancy

The execution of this long-term plan of expansion in Australia and abroad may be a factor to monitor for future buyers. 

Domino's Pizza Enterprises Ltd (ASX: DMP)

Market capitalisation: $2.73 billion

The tale for Dominos Pizza Enterprises Ltd (ASX: DMP) shares has been quite different over the last 12 months.

Launching at $2.20 per share in 2005, the pizza juggernaut reached an all-time high of $164.35 in 2021. However, it has tumbled year on year since then, including a drop of 49.4% in the last 12 months. 

Created with Highcharts 11.4.3Domino's Pizza Enterprises PriceZoom1M3M6MYTD1Y5Y10YALL1 Jan 20058 Jan 2025Zoom ▾200620082010201220142016201820202022202420052005201020102015201520202020www.fool.com.au

This could be viewed as a tempting buy-low option for investors hungry for ASX shares that could turn around in 2025. 

Despite Goldman Sachs's optimism about the appointment of new CEO Mark van Dyck on 6 December, Dominos was one of the highest shorted stocks on the ASX the following week.

It seems investors are pessimistic about a short-term turnaround. Meanwhile, Bell Potter advisor Chris Watt listed Dominos as a hold, saying: (courtesy of The Bull)

Recent sales have lagged internal targets, possibly hinting at slower short term growth. However, there is room for cautious optimism led by a new chief executive officer.

In our view, cost controls, more efficient media spending and aggregator partnerships could support earnings before interest and tax margin targets of between 10 per cent and 12 per cent. But near-term uncertainty suggests a wait-and-see approach.

Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Domino's Pizza Enterprises. The Motley Fool Australia has recommended Domino's Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

Which ASX sectors led the pack in March, according to Macquarie?

It was a volatile month for ASX 200 shares...

Read more »

Silhouettes of nine people climbing a steep mountain to the top at sunset, and helping each other along the way.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX was rocked by 'Liberation Day' this Thursday.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Superannuation

AustralianSuper sticks with US stocks despite recent turmoil

AustralianSuper’s head of international equities says they won't be shifting focus to Europe.

Read more »

Smiling man sits in front of a graph on computer while using his mobile phone.
Opinions

2 compelling ASX shares I'd buy now following the tariff stock market pain

These investments could make excellent buys in the current market sell-off.

Read more »

Child drinking milk out of a glass.
Share Gainers

Guess which ASX All Ords share just rocketed 12% in today's crashing market?

This ASX All Ords share is surging today despite the Trump tariff market turmoil. But why?

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Astral, Newmont, Ramelius, and Synlait shares are defying the market selloff and rising

These shares are rising despite the market weakness today. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ANZ, Breville, Cettire, and Treasury Wine shares are dropping today

These shares are having a tough time on Thursday. But why?

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Market News

How are ASX 200 investors responding to the new Trump tariffs today?

Australia didn’t escape the new Trump tariffs. Here’s how ASX investors are repositioning today.

Read more »