NEW YORK (Real Money) -- So let's see, Domino's (DPZ) and Harman (HAR) are now dead stocks? The fact that they opened up and then fell flat is the kiss of death, too, as if they are somehow software-as-a-service stocks or 3D printers or biotechs?
Last night I interviewed Patrick Doyle of Domino's and Dinesh Paliwal from Harman and I have to tell you that I think the action in their stocks, which was full of the sound and fury, actually signified nothing.
This wasn't the first time that Domino's has reversed like that in the 70-point run since I met Patrick Doyle, one of my bankable 21 from Get Rich Carefully. In fact, this stock has had some major problems getting by earnings days in part because Doyle is so candid about his business. Yesterday, he dropped a bomb about raw costs, particularly cheese, which has gotten a little out of control. But he has a largely franchise model and that price falls to the franchisees for the most part -- they do have some company-owned stores that get hit -- and otherwise the growth here was superb and the cash generation better than ever.
I know this tape has created so much confusion with its interaction with the bond market. I think this stock reversed in part because interest rates reversed and headed lower. Plus, when it comes to commodities, what comes up can come down. I simply don't believe the 25% move higher in dairy in the last quarter is sustainable, while I do believe the mid-single-digit comps here and the high-single-digit comps overseas are.
Harman's tougher. The action in the stock is mystifying. It opens at $114, a gap up of about five points, then cascades 12-straight points down, an hour before the conference call begins. Again, all that I can find that disturbs the stock is the bond market, as there was nothing substantive impacting Harman in that period. No earnings notes. No new stories.
Then the conference call begins, and the stock works its way back to where it is, slightly in the black from the day before after the call. Finally, it rolls over to close down a couple in that last-minute ugliness.