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Krispy Kreme Doughnuts (KKD), Starbucks Corporation (SBUX): Is It Too Late To Buy This Year’s Top Turnaround Stock?

The financial crisis forced every company in the world to re-evaluate its business model. Frozen credit markets, a recessionary global economy and weak consumer demand scared even the most profitable and successful companies into becoming stronger, leaner and more competitive. The result four years later is record margins, cash and earnings for the S&P 500.

Flickr/Karl Baron
Krispy Kreme has been one of the best turnaround stories on the Street, with shares surging after the company successfully emerged from the brink of bankruptcy.

But while the financial crisis ended up making the entire private sector stronger and more competitive, there is one company that stands out among its peers for its amazing rebound.

After a highly publicized IPO in April 2000 during the aftermath of the tech bubble, Krispy Kreme Doughnuts (NYSE:KKD) proceeded to surge, climbing from $10 to an all-time high of $49 in the next three years. That fueled massive buzz that the company was well on its way to becoming the next Starbucks Corporation (NASDAQ:SBUX) or Dunkin Brands Group Inc (NASDAQ:DNKN).

But after expanding too quickly and taking on too much debt, Krispy Kreme Doughnuts (NYSE:KKD) came dangerously close to bankruptcy during the darkest moments of the financial crisis, with shares trading as low as $1.15 in the spring of 2009. But since then, Krispy Kreme has been one of the best turnaround stories on the Street, with shares surging after the company successfully emerged from the brink of bankruptcy.

That rebound has given Krispy Kreme Doughnuts (NYSE:KKD) a second chance to grow into a quick-serve giant like Starbucks Corporation (NASDAQ:SBUX) or Dunkin Brands Group Inc (NASDAQ:DNKN). And it’s creating a big opportunity for investors. That’s because in spite of Krispy Kreme’s incredibly popular doughnuts and a virtual cult following of doughnut lovers, it is still a very small company with a limited domestic and international presence.

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