We came across a bullish thesis on Krispy Kreme, Inc. (DNUT) on wallstreetbets Subreddit Page by Wrong_Performer_6425. In this article, we will summarize the bulls’ thesis on DNUT. Krispy Kreme, Inc. (DNUT)’s share was trading at $6.04 as of March 4th. DNUT’s trailing P/E was 305.50 according to Yahoo Finance.
Krispy Kreme (DNUT) is on the verge of a major transformation, driven by its rapidly expanding partnerships and strong financial momentum. Despite significant investor skepticism, the company’s collaboration with McDonald’s is a game-changer that remains widely misunderstood. Truist analyst Bill Chappell, after discussions with management and institutional investors, highlighted that the market is underestimating the revenue potential from this partnership. With Krispy Kreme rolling out into 2,000 McDonald’s locations by the end of 2024 and a projected expansion to 12,000 locations by 2026, even conservative estimates suggest a substantial revenue uplift. If just 2% of McDonald’s customers buy a donut, this translates into $177 million in annual revenue, while higher adoption rates could push this to over $700 million, representing up to 42.5% of Krispy Kreme’s current annual revenue. Beyond McDonald’s, Krispy Kreme is aggressively expanding its presence in major retail chains such as Walmart, Kroger, Target, and Costco in the U.S., as well as Tesco and Sainsbury’s in the UK, with further expansion planned into Germany, Spain, and Brazil.
Financially, the company is delivering impressive results, with operating income skyrocketing 521.68% year-over-year to $81.72 million, and key liabilities declining across the board. Net income has turned positive for the first time since 2018, reinforcing Krispy Kreme’s financial turnaround. The company has achieved 18 consecutive quarters of year-over-year organic sales growth, further underscoring its momentum. With a clean balance sheet, continued expansion, and an underappreciated McDonald’s catalyst, Krispy Kreme represents a compelling investment opportunity. If execution remains strong, the stock could see a significant rerating as the market fully grasps its growth potential.
Krispy Kreme, Inc. (DNUT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held DNUT at the end of the fourth quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of DNUT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DNUT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.