Well, it looks like the upwards trend line is broken and it will be interesting to see how the stock reacts from here. I'm not to proud to confess that I'm one of those people who shorted this stock WAY too early, and I've lost a lot of $ and sleep over it in the past few months.
I've always thought it was a good company but "overvalued". I still think it is smart to short KKD, but timing is everything in the market as a string of margin calls has reminded me. However, if it behaves like 99% of stocks that run up to absurd valuations so quickly, it will pull back at least to half of the recent gain.
It went from 30 - 75 in about 40 days, so pulling back half of that 45 pt gain would put it at around $53 in the short-term. Of course in the long term, it will probably eventually trade at a P/E that's realistic for its growth rate, but that may not happen for awhile.
I wouldn't be surprised for it to drop to around 60 before the upcoming split and then drop down to the low 50s or lower in the next couple of months. The CNBC hype machine has quieted down on this one and people are waking up with a hangover and taking a look at the limited upside on this stock and the tremendous short-term downside.
When the P/E is 120 on a food stock, you can't expect it to go THAT much higher, and it has a long way to fall once the momentum traders abandon it (as they will as they do every stock when it stalls out after a meteoric rise).
The next week or two will be very interesting. I see KKD at 57-62 very soon...imho.
P.S. This KKD discussion seems to be a little more "mature" than the one on the Yahoo msg boards. I see a few more wildly off topic messages, but at least people are being a bit more civil here. I guess the Yahoo boards have their place though. |
