Sell alert! Why this expert is calling time on Domino’s and Pro Medicus shares

Domino’s Pizza Enterprises Ltd (ASX: DMP) and Pro Medicus Ltd (ASX: PME) shares are both leaping higher today.

In early afternoon trade on Wednesday, Domino’s shares are trading for $18.26 apiece. That sees shares in the S&P/ASX 200 Index (ASX: XJO) fast food pizza retailer up 7.0% today.

Pro Medicus stock is enjoying an equally strong. At $130.44 apiece, shares in the ASX 200 health imaging company are up 6.9%.

For some context, the ASX 200 is up 2.6% at this same time, buoyed by news of a ceasefire in Iran.

Unfortunately for longer-term stockholders, today’s outperformance of Pro Medicus and Domino’s stock is not par for the course.

Despite today’s boost, Domino’s shares remain down 29.5% since this time last year. And the Pro Medicus share price remains down 30.7%.

While both ASX 200 stocks pay dividends, those haven’t come close to making up for the capital losses suffered over the past year.

And looking ahead, Fairmont Equities’ Michael Gable doesn’t expect a near-term rebound for either company (courtesy of The Bull).

Here’s why.

Time to sell Pro Medicus shares?

“The company provides medical imaging software and services to hospitals and healthcare groups across the world,” said Gable.

Explaining his sell recommendation on Pro Medicus shares, he said:

We remain negative on the technology sector as higher interest rates, continuing market volatility and increasing uncertainty leaves investors questioning the high multiples that companies, such as Pro Medicus, trade on.

As we saw in the early 2000s, technology stocks can lose a significant amount of value before they become attractive again. This rotation out of technology stocks often sees investors flocking to hard assets, such as mining company shares. This is what we’re seeing in share markets at the moment, and this dynamic has further to go, in my view.

Is there more pain to come for Domino’s shares?

Atop Pro Medicus shares, Gable also recommends selling Domino’s shares.

“Although the share price of this fast food company has lost a lot of value in the past few years and recently remained in a downtrend, I don’t see any price support emerging at current levels,” he said.

Gable concluded:

The company is entering a challenging period, where increasing costs and lower consumer confidence could erode margins and put downward pressure on earnings. I can’t identify a positive catalyst at least until the company posts full year results in August.

I expect investors to continue selling the stock on any sharemarket bounce.

The post Sell alert! Why this expert is calling time on Domino’s and Pro Medicus shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Domino’s Pizza Enterprises and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.