Investing in breakfast stocks

Look to these makers of tasty morning treats for performance potential in 2013.

By Benzinga Jan 7, 2013 3:01PM

Image, Man eating in car copyright Image Source, Corbis, CorbisBy Tim Parker

Shares of Krispy Kreme (KKD) were up 10.5% on Friday, closing at $11.15 -- a level not seen since 2007. The stock traded more than four million shares -- four times higher than average.

Investors went on a buying frenzy after Longbow research initiated coverage of the stock with a "buy" rating and a $15 price target. The company had a strong 2012 -- up more than 56%.

Although Krispy Kreme had a strong year, some investors remember when the company got ahead of itself by expanding too fast. What was once a $48 stock in 2003 now hovers around $10 after reaching lows of $1 per share. The company has a stated goal to open 200 stores within the next four years, which could negatively weigh on the company's balance sheet.

However, how about other breakfast stocks? What does the future hold for others in the space?

Dunkin Donuts (DNKN) was once known for its "time to make the doughnuts" catchphrase and the "munchkins" -- those delicious doughnut holes, but has Dunkin Brands added as much fat to your wallet as it could to your waistline?

Since its July 2011 IPO, Dunkin is up about 21% and with a solid uptrend in the charts since September; there is much reason for optimism.

What's not so sweet is Dunkin's short interest of 13% --  much higher than Krispy Kreme's 3.7%. Dunkin will present at an upcoming investors conference on Jan. 16. This could be a volatile day for the stock with the legion of shorts waiting for a hint of bad news or overly positive news that would cause then to cover and run.

Panera Bread (PNRA) saw a 17% rally in 2012. Although not as much of a niche breakfast stock as Dunkin or Krispy Kreme, Panera is a favorite among the breakfast crowd for its bagels, pastries, and coffees. It also has the distinction of being a bistro for all meals -- something the other two do not enjoy.

Panera has year-over-year sales growth of 16.8% -- better than Dunkin's 5% and Krispy Kreme's 8.5%.

What might be concerning to investors is Panera's 7.8% profit margin, compared to Dunkin's 12.8% and Krispy Kreme's 38%.

Short interest stands at 7.8% and the chart shows a descending channel pattern since October 2012. Other technicians may argue that there is a larger ascending channel going back to July. Analysts like the stock having placed 12 "strong buy" or "buy" ratings on it.

It is important to note that comparing Panera to Dunkin or Krispy Kreme isn't an apples-to-apples comparison, but investors should ask whether committing capital to companies that are firmly rooted in the breakfast space has advantages over investing in a company like Panera that captures market share in meals throughout the day.

More from Benzinga

Jan 7, 2013 8:02PM

SRTdriver, can't say I necessarily like some of the vocab you use, but your point is well taken.  Many Americans are lead by the nose...can't think for themselves, but that's the big plan with One World Government/New World Order.  

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124 rated 1
266 rated 2
452 rated 3
702 rated 4
671 rated 5
604 rated 6
640 rated 7
495 rated 8
267 rated 9
158 rated 10

Top Picks




Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.