Krispy Kreme (NYSE: KKD)
Trading at $35.13 as of 2/6/04

This article is part of our annual Stocks Fools Love Valentine's Day special.

This year, Motley Fool Stock Advisorselection Krispy Kreme(NYSE: KKD) will produce roughly 3 billion doughnuts. Maybe you'll be good for one or two -- or dozens, even. One thing you can say about the company: It sure knows how to make dough. The company went public just four years ago, but it has been serving up its signature sweetness since 1937.

While Krispy Kreme will be posting its financial results for fiscal 2004 later this month, the first three quarters have been as inviting as a "Hot Doughnuts Now" sign aglow. Over the past nine months, it posted a 40% spike in diluted earnings on a 36% uptick in net revenues.

For the year, the company is looking to earn $0.92 a share on a healthy 10% surge in comparable-store sales. That last point bears repeating because Krispy Kreme isn't getting a whole lot of market respect these days. The stock has shed a quarter of its value since the summer, despite posting nothing short of encouraging news along the way.

Yes, it's the whole diet thing, isn't it? The late Dr. Atkins has weaned weight watchers off carbohydrates and we're still in the afterglow of teetering New Year's resolutions. I guess all we would need now is an outbreak of Mad Dough Disease and Krispy Kreme would really be doomed, right?

Not quite. The company still expects to post favorable growth in comps for the January quarter, on the way to $1 billion in systemwide sales for the fiscal year. Despite the gluttonous and fanatical decadence of Krispy Kreme wedding cakes, tribute sites, and personal odes, these eats are still treats that are consumed widely, yet typically done so in moderation. Besides, how can a company with a CEO named Livengood be bad for you?

Though dieting trends often make for poor exports, the same can't be said for Krispy Kreme, which aspires to compete with the likes of specialty shops from Starbucks(Nasdaq: SBUX) to Panera(Nasdaq: PNRA). When the chain opened its first store in Canada, its first week of doughnut sales shattered the stateside mark. Just last year, it opened its first Krispy Kreme in Australia -- the company's debut outside of North America. There is still plenty of real estate left to conquer. Last month found the company entering Mexico and Hawaii for the first time. Krispy Kreme didn't arrive in Europe until just four months ago.

The world is hungry for Krispy Kreme. Despite its storied past, this company is just starting to grow, with systemwide sales more than quadrupling over the past five years.

Put all the ingredients together and you begin to see why this is exciting. A rapidly expanding concept that has produced double-digit percentage comp gains every single year since going public gives me every reason to believe Krispy Kreme's success will continue. That's why David Gardner chose it as his featured pick in the September issue of Motley Fool Stock Advisor (you can try a subscription risk-free).

Still hung up on the notion that Atkins followers and other calorie counters will eschew Krispy Kreme and bring about an end to its heady global growth? That's your prerogative. No dough for you.

Rick Aristotle Munarriz thinks he'll surprise his wife with a dozen doughnuts instead of a dozen flowers this Valentine's Day. His devotion to Krispy Kreme is genuine. He owns stock in the company. Rick's other stock holdings can be viewed online, as can the Fool's disclosure policy

Stocks Fools Love represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc. or the company in question or as representative of anyone or anything other than that specific Fool's thoughts.