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So I haven't been fully behind the Krispy Kreme Doughnuts (KKD) thesis. Sorry, it's just the way I am; I haven't been able to gather the amount of courage that is necessary to allow me to buy this low-priced equity.
Yet the stock is firmly above its 52-week low of $2.56. It rose 4.7% on Friday, settling out at a quote of $4.46. That price may be well below the 52-week high of $5.15, but it doesn't matter to the speculators who bought ahead of the second-quarter earnings report that was posted after the bell this past Thursday. They made money.
According to the press release, the company made three cents per share. This beat expectations by three pennies since Wall Street was hoping for the pastry entity to simply break even, as Bloomberg Businessweek reports.
Same-store sales were up 5.7% for company locations and 5% for domestic franchise stores. Shareholders should love those stats. Also, guidance for fiscal 2011 experienced an improvement.
Krispy Kreme Doughnuts is obviously doing better. After perusing some of the published pieces on the chain, I'm getting the feeling that the stock might be a viable trade at this point. Check out the commentary over at TheStreet.com on the investment potential of the company.
I agree, things aren't as bad as they once were for the business model. Nevertheless, the one-year chart is a bit volatile for me at this time. As speculative bets go, though, this might not be a bad one, I concede.
Bottom line: Speaking for myself, I won't be taking a chance on this idea. But I do understand the rationale of those who disagree with me (just be sure to have a proper exit strategy in place if you decide to take the plunge).
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
9-04-2010 @ 11:32PM
Michael Sanders said...
I'll have to admit, KK builds a terrific doughnut! Former-mutual fund manager, Peter Lynch always said to "invest in things that are right under your nose." His wife turned him on to Leggs, which were a women's stocking which came in a plastic egg... It turned out that his wife was right! It was one of his most lucrative investments. You should still do your homework on the company. Many years ago, I was burned by investing in a company which had a superior product, but they were late to market and lost the bid to provide microprocessors to Sun. Ouch, but not even 1/50 as bad as being in banks, in 2009. I almost lost everything, that year.