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Pizza Sales Pile Up Overseas

By Jeremy MacNealy – Updated Nov 16, 2016 at 1:28PM

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With growth stagnating at home, pizza companies are heading to Asia for growth. And they're finding it.

Without a doubt, pizza is an American fixture. From Chicago-style deep dishes to New Jersey's tomato pies to small-town thin crusts, pizza is as customary in the States as are hamburgers and french fries. And since we like pizza so much, we seem to be in the middle of a trend of sharing our tomato-lovin' wealth with the rest of the world.

Through the first two quarters of fiscal 2005, Domino's Pizza (NYSE:DPZ) saw its international same-store sales grow by 8.2% over the same period last year. The company is fueling its growth by expanding rapidly overseas. And while openings of domestic units rose by only 0.3%, international store growth was substantially higher at 2.3%. Domino's was able to combine its older units with newly added international locations to increase net income in the second quarter of this year by 47% over the same quarter last year.

Yum! Brands' (NYSE:YUM) Pizza Hut is also focusing its efforts overseas. It has gone so far as to make a distinction between its China division and its international division; even though there's a lot of growth beyond America's borders, things are really taking off in China. In its most recent quarter, Yum! grew its Pizza Hut restaurants by just 1.5% internationally (excluding licensees), but in China alone, the brand added 16.2% more restaurants.

And let us not forget Papa John's (NASDAQ:PZZA). It recently announced the opening of its 15th restaurant in Shanghai, with plans to open an additional 250 units in China over the next five years. Through its focus on international expansion, the company saw its international net sales increase by 12.4% in its third quarter.

Because of international expansion, particularly in China, Papa John's has seen its stock rise by 70% over the past year. Domino's is following close behind, with a 50% uptick in the past year. Meanwhile, Yum! Brands has given investors a decent return by rising 21% in the past year. All three of these companies have had market-pounding returns over the past few years.

With China's population of more than 1.3 billion and a new child being born every two seconds, Foolish investors have a good reason to like the prospects of companies that are catering to international pizza-eaters. Given such enormous growth potential, all three fully loaded companies might be worth ordering for your portfolio.

Read on for a slice of further Foolishness:

Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.

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Stocks Mentioned

Yum! Brands, Inc. Stock Quote
Yum! Brands, Inc.
YUM
$110.65 (-0.13%) $0.14
Papa John's International, Inc. Stock Quote
Papa John's International, Inc.
PZZA
$75.15 (1.39%) $1.03
Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
DPZ
$330.00 (3.08%) $9.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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