Gorging on Krispy Kreme

  @FortuneMagazine November 21, 2013: 7:37 AM ET
KRI09 donut

Call it doughnut déjà vu. Krispy Kreme, the venerable doughnut maker based in Winston-Salem, N.C., is in the midst of a major stock run-up. At a recent $25, its shares have tripled in the past year and have risen around 900% over the past five years. Like its signature product when it rolls out of the oven, its stock is extremely "hot now." Sound familiar? It should. This is the second episode of Krispy Kreme mania in the market in just over a decade.

The first time investors fell for Krispy Kreme was right after its IPO -- and just about the time the dotcom bubble was bursting in 2000. For a time, KKD shares appeared impervious to gravity. The stock split twice in 2001 alone and kept going higher. In a 2003 cover story, Fortune called Krispy Kreme "America's hottest brand." But then, burned by an accounting scandal, the low-carb diet craze, and its own overexpansion, Krispy Kreme tanked. By 2009 the stock had fallen from a split-adjusted high near $50 to $1. The depth of that collapse has made Krispy Kreme's comeback even more compelling. "It's risen from the dead as a company," says Tony Brenner, an analyst with Roth Capital Partners.

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