Krispy Kreme On The Rebound
Sep 28th, 2007 by Shaun Carter
I wrote about Krispy Kreme Doughnuts back on September 13 and was accumulating at anything below $3.50/share and ended up with an average price per share of about $3.20.
I’m now wishing I had backed up the truck rather than only purchasing a few thousand shares of KKD. In one week the stock has climbed 35% and now trades at $4.70/share. This has moved my gain to over 40% and I have now entered a 5% trailing stop loss on my shares to lock in the gains should the stock suffer a setback.
I still think that Krispy Kreme is supremely undervalued, but this run-up in price seems too steep to sustain itself. I am anticipated getting stopped out next week and re-accumulating on a dip and increasing the position significantly.
Perhaps this is an accumulation preceding a tender offer or just a sustained short squeeze. Either way, the longs are rejoicing this week and the shorts are losing their shirts.
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