Krispy Cream, a long term loser a short term winner

Krispy Kream (symbol: kkd) has had some rough water lately, the stock price has plummeted and the number of shares short is about half of the total shares but don't write it off as a bad company yet.

While Krispy Kream (I'll call it KKD) has taken a big dip in the share price it has been up considerably lately. This recent rise will convince shorts to start covering, this in turn will drive the price higher convincing more investors to jump on the band wagon and more shorts to cover. The stock closed at $6.01 a share today and I can see it hitting $10 in the near future.

Aside from that piece of herd mentality there is another factor in the stock price. It is undervalued! The company has made a revival and at the moment is only losing 9 cents a share every year. This company may be profitable in the next quarter and since it is trading below book value it should make a significant jump. While I don't think this stock will hit its prior levels of $50 a share in the near future it has a good chance of hitting and surpassing the $10 mark.

Disclosure: At the time of publishing the author owns no shares of KKD and has no affiliation with the company.