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The Gateway Grizzlies are a Frontier League team that just-so happens to play about 12 miles from my home. Last month, Tom Barlow mentioned how one of the ballpark's unique concoctions is a hamburger that swaps out the traditional boring bun with a Krispy Kreme (NYSE: KKD) doughnut. I must say, I'm equal parts tantalized and repulsed, and have informed my husband and friends that we WILL be attending a Grizzlies game this summer, if only to try the delicacy (and, of course, to support the fledgling team). While KKD has been on my mind of late as I dream of the perverse amalgam of ground beef and fried dough, it is also under the microscope this week as it prepares to release its fourth-quarter 2007 earnings after the close on Thursday. Analysts are currently expecting the firm to bank anywhere between five and eight cents per share (according to Zacks.com).
The technical picture is currently improving on the shares; just this week, KKD managed to hurdle above resistance at its 80-day moving average for the first time since February 23. For the time being, the stock has also regained control of its 10-week and 20-week moving averages.
One factor that has consistently been significant for KKD is short interest. While the number of shorted KKD shares has dropped almost 50% during the past two years, nearly 28% of the equity's available float remains devoted to the short side.
What's more, the equity's short-interest ratio (or number of days to cover the existing shorted positions) stands at 20.8. A positive turn in the earnings confessional could spur even more short sellers to drift toward the exits, perpetuating a short-covering rally. Throw the possibility of acquisition into the mix (as Hilary Kramer mentioned last month), and the potential for an all-out short squeeze is very tasty, indeed. Check back on Thursday for a look into the confectioner's earnings news.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
What's more, the equity's short-interest ratio (or number of days to cover the existing shorted positions) stands at 20.8. A positive turn in the earnings confessional could spur even more short sellers to drift toward the exits, perpetuating a short-covering rally. Throw the possibility of acquisition into the mix (as Hilary Kramer mentioned last month), and the potential for an all-out short squeeze is very tasty, indeed. Check back on Thursday for a look into the confectioner's earnings news.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
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