Krispy Kreme is a branded specialty retailer of premium quality doughnuts which are made throughout the day.As of 10/29/00, there are 164 Krispy Kreme stores operating nationwide. For the 39 weeks ended 10/29/00, revenues rose 36% to $218.9M. Net income totalled $10.5M, up from $4.8M. Revenues benefitted from increased comparable store sales and new franchise stores. Earnings reflect the implementation of a new route management system.

January 25, 2001

Krispy Kreme is a producer and retailer of over 20 varieties of premium quality doughnuts. The stock went public last April at $21 and on November 2nd, KREM traded to an all-time high of $108.50, representing a 417% gain in less than six months. However, the stock was hit with insider selling as restricted stock came off of the IPO lock-up. Shares of KREM fell to a relative low of $60.13 on December 20th. More recently, the stock has been building a base in the $62-$67 range and on Wednesday, it broke through $67. We believe that KREM could continue to move higher as we approach the earnings report on March 8th before the bell. We are also looking for a split announcement with the earnings report or out of their next BoD meeting. The company already has enough shares with 13 million issued and 100 million authorized. Going forward, support is the January 22nd intra-day high of $66.67 with additional support at $64, Wednesday’s intra-day low. Resistance is the January 12th intra-day high of $69.69 and then the January 10th intra-day high of $73. Traders may consider entry points on a bounce off of $66.67 or a move above $69.69 on volume greater than 100,000 shares. We plan to use stops at $62 to limit potential losses.

Picked on January 25th @ $67.31
Change since picked +0.00
Stop Loss @ $62.00

February 1, 2001

Krispy Kreme Doughnuts felt the effects of its 2.3 million-share follow-on offering on Wednesday. The stock fell to an intra-day low $64.63 on heavy volume of 493,000 shares. On Thursday, shares of KREM made a small comeback after hitting an intra-day low of $64.25 on 517,000 shares. Due to size of its recent offering, the stock may need to test the low end of its trading range at $62.50 before it can move higher. In the meantime, KREM has support at the January 24th intra-day low of $64 with stronger support at the $62.50 the January 18th intra-day low. Resistance is the 20-dma at $67.58 and then $69.50, Tuesday’s intra-day high. A bounce off of $64 or a move above $67.58 on midday volume greater than 100,000 shares may be possible entry points. We are leaving our stops at $62 as downside protection.

Picked on January 25th @ $67.31
Change since picked –1.75
Stop Loss @ $62.00

January 30, 2001

Krispy Kreme held its ground on Tuesday despite a 2.3 million-share follow-on offering. Shares of the quality doughnut maker traded to an intra-day high $69.50 before pulling back to close at $67 on volume of 3.06 million shares (2.3 million follow-on plus 758,000 trade volume). The stock may be able to rise now that the highly publicized follow-on offering is complete. From a technical standpoint, support is the 5-dma at $66.71 with additional support at the 10-dma, now up to $65.58. Resistance has come in at the 20-dma, currently at $69.09, and then $73, just above the January 8th intra-day high. Traders may consider opening new positions on a bounce off of $66.71 or a move above $69.09 on volume of at least 100,000 shares by midday. Our stops are holding steady at $62.

Picked on January 25th @ $67.31
Change since picked –0.31
Stop Loss @ $62.00

January 28, 2001

Doughnut producer and retailer Krispy Kreme Doughnuts sold off to some extent on Friday. Shares of KREM traded to an intra-day low of $65.56 on light volume of 63,400 shares. On the positive side, the stock bounced off of its 5-dma and put in its third consecutive higher low. Hopefully, the volume will pick and push KREM higher. We are looking for a split announcement with the earnings release on March 8th before the bell or out of their next BoD meeting. In the meantime, support is the 5-dma at $65.38 with stronger support at $64, Wednesday’s intra-day low. Resistance is the January 16th intra-day high of $68 and then $70.69, the 20-dma. A bounce off of $65.38 or a move above $68 on midday volume greater than 100,000 shares may prove to be possible entry points. Our stops remain at $62 as downside protection.

Picked on January 25th @ $67.31
Change since picked –1.31
Stop Loss @ $62.00