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JimVanMeerten (59.06)

Is someone buying Krispy Kreme?



February 22, 2010 – Comments (0) | RELATED TICKERS: KKD

I'm from the south and one of the first things I experienced my freshman year is college was a breakfast of Krispy Kreme (KKD), the breakfast of champions. Once you've had one coming right off the line you're hooked. This is the donut with a cult following and just won't go away. A few years ago, KKD was the darling of the investment community with major plans to take their gourmet vices into China. They were opening stores left and right but seemed to just get too big for their britches -- along with the rest of us that were goggling up those treats.

Lately the stock has just languished and not done very much. In the past month something has been happening. All of a sudden KKD came up on my Barchart screener for stocks having the most frequent price appreciations. The price has been moving up and the stock had price appreciation in 7 of the last 20 trading sessions and 4 of the last 5. In the last 20 sessions there has been a 15.38% price increase. The stock is enjoying very positive ratings on Barchart's short term technical indicators.

Analysts are not real high on the stock but do predict a 20.5% increase in earning per share this year and a 15% EPS 5 year growth rate.

Why the priced movement? There are some rumors that Wendy's or some other chain may either buy the company outright or begin offering their donuts as a breakfast item. KKD has been known to sell smaller versions of their donut frying machines that can be used as an alternate to owning a whole store.

This is a stock to watch and maybe place a stop on the 20 day moving average in case the rumor is full of holes.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: no positions at the time of publication

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