As investors have stuffed themselves with Krispy Kreme (NYSE: KKD), the stock has nearly tripled in the past year. But before we jump into why this company has what it takes, let's look back for a moment and understand why it didn't look so tasty in the past.

Beginning in fiscal 2004, Krispy Kreme started to report massive losses resulting from overexpansion. To make matters worse, management was also accused of cooking earnings in 2005, and a few of their franchisees filed for bankruptcy protection soon after. The stock tumbled from more than $40 a share to less than $3 in 2009.

What is the turnaround story?
Krispy Kreme has brought in new management to take the company back to profitability, and already it is expanding its product line and moving away from just doughnuts. Those tasty, hot glazed confections aren't going anywhere; instead, the company is trimming the fat.

Now it's going to offer healthier items as complements to the doughnuts, such as low-fat yogurt, oatmeal, bagels, and much more. In addition, Chief Marketing Officer Dwayne Chambers says the company plans to roll out a revamped coffee lineup in September. All this together may have Krispy Kreme taking a greater share of the doughnut market.

On a more surprising note, the company has been developing internationally in the past three years, primarily in Asia and the Middle East. In fact, it has more franchises abroad than in the United States. Domestically there are 230 stores, while abroad there are more than 400 stores in 20 different countries. I'm sure you would have never thought that Krispy Kreme operates in the likes of Qatar, Kuwait, Malaysia, and Thailand, to name a few.

And speaking of Thailand, Chambers noted that when he went to visit Bangkok last December, there were still lines forming outside the shop even after it had been open for two months. In fact, there was so much demand there that Krispy Kreme had to limit people to only two dozen doughnuts per person!

Small fish in a big pond
In terms of revenue generation, competitors such as Tim Hortons (NYSE: THI) and privately owned Dunkin Brands dwarf Krispy Kreme. In the past fiscal year, Krispy Kreme generated sales of $362 million, while Dunkin and Tim Hortons brought in $577 million and $2.55 billion, respectively. Despite its lower sales, though, I still believe that Krispy Kreme displays a competitive advantage over its rivals: its brand.

When you think of Krispy Kreme, you think of the experience that you get. Besides the fact that the place has good doughnuts, there are two other things to consider. First, when that red sign lights up to let people know there are fresh doughnuts, hungry people flock to the stores. That's when they're hoping they can get a great doughnut with a kick: It's just been made, it's fresh, and, best of all, it's hot. Secondly, people come to watch the doughnuts go down the conveyor belts and observe every step of the process in making them. These attributes differentiate Krispy Kreme from Dunkin and Tim Hortons.

Foolish bottom line
Krispy Kreme is truly a sweet stock. The company is finally increasing its revenue and decreasing its costs. At a little over $9 a share, can this stock continue rising? I think so.

Fool contributor Igor Meyerson owns no shares of any company mentioned here. Motley Fool newsletter services have recommended buying shares of Tim Hortons. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.