Shares of both doughnut chains have surged more than 20% since the start of the year. Wall Street, though, has an average one-year price target of $9.03 on Krispy Kreme, about 12% above where it currently trades. Dunkin' shares are trading at $31.03, near the one-year $31.45 price target. Krispy Kreme is cheaper, too, trading at a price-to-earnings ratio of about 27 versus Dunkin's multiple which tops 80.

Both companies face tough challenges. Rising commodity prices are a threat to margins -- as are growing concerns in the U.S. about eating food with little-to-no nutritional value. That means that discounting will be needed.

Net income at Krispy Kreme in the latest quarter was $143.5 million, or $2.01 a share, as same-store sales surged 8.3%. The Winston-Salem, N.C., company also benefited from a tax benefit of $139.6 million. Its outlook for fiscal 2013 was 35 cents to 41 cents versus expectations of 35 cents. Revenues increased 11.4% to $403.2 million. In Fiscal 2013, Krispy Kreme  plans to open five to 10 company stores, 10 to 15 domestic franchise stores, and about 75 international franchise stores.

Like Krispy Kreme, Dunkin Brands reversed a year-earlier loss. The Canton, Mass., company last month reported a fourth-quarter profit of $11.6 million, or 10 cents per share. Revenue for the quarter rose 12.5% to $168.5 million. Excluding one-time items, the company earned 30 cents a share, beating the 28-cent average estimate of Wall Street analysts. The problem for Dunkin' Donuts is same-store sales, which are expected to grow 3.5% to 4% at Dunkin' Donuts and remain flat or increase up to 2% at Baskin Robbins for 2012. To complicate matters, Dunkin' recently announced a secondary offering of up to 22 million shares, which will further dilute existing shareholders.

Given the issues affecting the two companies, both stocks should be avoided.

Jonathan Berr has gone a few months since eating a doughnut. He does not own shares of the companies listed here.