Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:20 and 3:30 pm EST on CNBC:
Krispy Kreme has risen from the dead in the past year, after being in the doldrums for 4 years after its 2008 crash. The stock almost tripled from June 2012 to March 2013, but it looks like their strong run is likely over.
First chart is the 1 year daily chart, which shows that KKD broke its steep uptrend last month, and has since broken below its multi-month support level around 13.50. That bodes poorly for the stock in the short-term:
In the long-run, major support for the stock is around the $10 level. The 5 year weekly chart shows that the stock made an important breakout above the $10 level to start 2013. That is the first area where I might get interested on the long side:
But the fundamental outlook for KKD is not exciting overall, as it’s projected to earn 0.60-0.75 by 2014, hardly an exciting proposition for a stock trading around $13 (around a 20 P/E), especially since earnings growth is expected to slow in the next 2 years. I really would stay away from this name on either side of the ledger.