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Non-Tech : Krispy Kreme Doughnuts, Inc. (KKD)
KKD 21.000.0%Aug 4 5:00 PM EST
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To: jhg_in_kc who wrote (827)8/29/2001 7:10:20 PM
From: TimF  Read Replies (3) of 1001
 
KKD could expand 400 per cent and still have room for anothter 100 per cent expansion before they became ubiquitous.

And if this 800% growth happens and the profit grows 1200% what would be a reasonable price to pay for a company with about $70mil of profit and slow growth (slow from this level, obviously not to this level if it happens). Lets give it a P/E of 15 (say 5% growth and a generous PEG of 3), that would give it a market cap of just over a $1bil or somewhere around two thirds of the current market cap.

Considering the risk that KKD never does actually get 12 times its current profits and considering the time value of money the company should cost less now then a future Krispy Kreme with all of that profit. Lets be generous and say that even if we assume Krispy Kreme will grow as fast as you think it will KKD should sell for half of its current price. But really that is probably being too generous.

At a reasonable valuation I might buy KKD. Its doing very well right now, its growing without packing on debt, from all I can tell it is a solid company, but its stock is selling at dot com bubble prices. Even the dot com and internet infrastrure companies that are still profitable (not many of those I think) went down a lot from their stratospheric bubble prices.

Tim
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