Krispy Kreme Stays Hot

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Despite the anti-sugar set, there will always be a few safe bets for a sugar fix. Krispy Kreme (NYSE: KKD) served up an exciting fourth-quarter preview today. The now-famous (and for some, perhaps, infamous) "hot light" has still got some pretty compelling allure.

Despite a market that has put Krispy Kreme's stock price on a diet since last summer, the company comes with some serious recommendations. It happens to be a Motley Fool Stock Advisor pick; it was also Fool Rick Munarriz's choice for the Stocks Fools Love feature last week, as he predicted its power to withstand current no-fun dietary forces.

While I've pondered the effects of the current anti-carb craze on people's eating habits, we're not talking about some package of cold, hard cookies off the shelf at your local Safeway (NYSE: SWY) or Kroger (NYSE: KR). Take that, Keebler Elves.

I happen to know some extremely healthy eaters who have given up the high-carbohydrate diet (they have far more discipline than I). I also know that there's a school of thought that total abstinence from indulgence is a recipe for dietary failure. I've noticed that when they are in the mood for a little decadence, generally it's for something worthwhile (even if it means tagging a little extra running or spinning into the workout). And many people consider Krispy Kreme's doughnuts to be a worthwhile indulgence indeed, especially when they're hot off the presses.

Krispy Kreme's fourth-quarter systemwide sales increased 25.6%, helped by new store openings, with same-store sales bulking up 10.7%. It stood by its fourth-quarter estimate, which projected earnings of $0.26 per share. Fiscal 2004 earnings are expected to come in at $0.92 per share. The company will officially report on March 10. For fiscal 2005, Krispy Kreme expects to post earnings of $1.16 to $1.18 per share. It intends to open 120 stores this coming year.

Investors still seemed unconvinced. Krispy Kreme shares were up only about 1% at $37.37 in recent trading, a far cry from the stock's 52-week high of $49.74. However, the comparison between Krispy Kreme and Starbucks (Nasdaq: SBUX) -- and the idea that Krispy Kreme could follow in Starbucks' stellar footsteps -- makes a lot of sense. Both offer an addictive taste of affordable decadence and have targeted aggressive growth, both stateside and internationally.

Do you think Krispy Kreme can be stopped by the war on carbohydrates? Stop by the Krispy Kreme discussion board. Or if a Krispy Kreme confection is your worst nightmare, you might want to talk it over with Fools living the Low Carb Way of Life.

Alyce Lomax does not own shares of any companies mentioned, though she will say there's nothing like a hot Krispy Kreme doughnut.