More Value Left in Krispy Kreme (KKD)

It is always interesting when you see a sharp rise in the shares of companies making unhealthy products during the start of any year.  Fried flour coated with sugar and all sorts of unhealthy things is probably just as much of a “moderation new year’s resolution” as fried chicken, beer, cigarettes, and pizza.  So when you see a surge in Krispy Kreme Doughnuts, Inc. (NYSE: KKD) on the first Friday of the year you might scratch your head.

The gain today is due to a brokerage firm analyst at Stephens picking up coverage with an upgrade on the doughnut maker with an “Overweight” rating and assigning a price target objective on the stock of $8.50 per share.  After a $6.42 close the day before and with a big gain of 10.5% on the news to $7.10, about one-third of the entire projected move came all in one day. 

What makes this Overweight rating interesting here is that Stephens is actually conservative because the Thomson Reuters consensus price target is three cents above $9.00.

Average volume is about 560,000 shares and with two hours until the close of trading there have been 830,000 shares traded.  This is not a bad gain at all considering that this was a boutique analyst upgrade. Imagine if it was a bulge bracket firm upgrading the stock.  The last short interest report showed that some 2.76 million shares were short and that was the lowest short interest in almost a year.

JON C. OGG