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Why It’s Time to Buy Dunkin Brands Group Inc (DNKN)

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Leave it to science to confirm what many of us knew all along–coffee and donuts boost brain power.

According to a study published in the journal Human Psychopharmacology: Clinical and Experimental, researchers at the University of Barcelona discovered that a caffeine-glucose combo juices the brain in terms of attention and memory.

Dunkin Brands Group Inc (NASDAQ:DNKN)

Perhaps stock analysts at Lazard Capital were sipping coffee and enjoying a glazed doughnut when they initiated coverage for Dunkin Brands Group Inc (NASDAQ:DNKN) with a Buy rating and gave shares a $51 price target, which would make for some sweet upside (16%). Or, perhaps they simply saw plenty to like about the fast food giant.

Headquartered in Canton, Mass., Dunkin Brands Group Inc (NASDAQ:DNKN)’ Donuts has more than 10,500 locations in some 31 countries. In the eastern United States, outlets are familiar sites in every state. That hasn’t been the case on the country’s West Coast—until now.

Dunkin’ Donuts is mulling expansion opportunities in Los Angeles, Riverside, San Diego, San Bernardino, Ventura and Orange counties. It plans to opened new restaurants in these regions by 2015.

Also, Dunkin’ Donuts continues to introduce new items as it expands beyond its signature coffee and donuts. The company just debuted a line-up of “hot & spicy” breakfast sandwiches, and frozen beverages to wash them down with.

Going gluten-free

In addition, Dunkin’ Donuts is on track to beat rivals McDonald’s Corporation (NYSE:MCD) and Starbucks Corporation (NASDAQ:SBUX) in launching the fast-food industry’s first gluten-free pastries nationwide. Gluten-free cinnamon sugar doughnuts and blueberry muffins with be available in participating Dunkin Brands Group Inc (NASDAQ:DNKN)’ stores this year.

Gluten is a protein complex found in wheat flour. While a growing number of people are allergic to the protein, going gluten-free has become a fad diet popular among some high profile celebrities. Gluten free foods are growing in popularity as a healthy option, and restaurants are moving to capitalize on the trend.

Dunkin Brands Group Inc (NASDAQ:DNKN)’s wheat-free pastries will be packaged separately to avoid contamination from other foods that contain wheat flour, according to the company. Tested in a few Massachusetts locations, the company “is pleased with the results.”

Starbucks Corporation (NASDAQ:SBUX) is also considering selling gluten free products following the purchase last year of La Boulange, a bakery that sells organic breads. In the meantime, the Seattle-based coffee behemoth continues to perk up its portfolio with new beverages. The company is testing cold-foam mocha drinks and handcrafted sodas in some markets.

Plus, in efforts to get coffee junkies to think of Starbucks Corporation (NASDAQ:SBUX) as more than just a java joint, Starbucks is aiming to boost sales by making food a bigger attraction. Several new sandwiches, salads and a brown rice bowl have recently been launched and well received.

The Seattle based coffee giant has a market cap of $50.66 billion, pays a $0.21 per share quarterly dividend, and is currently trading at a 52-week high thanks to an upgrade from Argus and fresh $77 price target. Shares are up 25% year-to-date.

Meanwhile, McDonald’s Corporation (NYSE:MCD) continues to receive raves from even the most discerning palates with is legendary burgers and fries–comfort food. Yet the company is on a non-stop mission to develop new ideas and recipes.

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