This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Turnaround Stories From Smallville

Stocks in this article: KKD COSI

NEW YORK ( TheStreet) -- This past couple of weeks has been full of surprises, primarily on the earnings front, for a number of smaller names that I own or follow.

As a value investor, I don't focus a great deal of attention on a single quarter's release. Unless there's a game-changing event that is contrary to the reasons that I took a position in the first place, it is unlikely that I'd close a position based on a disappointing number. By the same token, it is good to see incremental progress, especially in cases when I've taken a position in "fixer-uppers" or long-shots that are facing challenges and trying a turn-around.

Krispy Kreme Doughnuts (KKD) is a great example of a turnaround story. Formerly a high-flying growth company after going public in 2000, the name fell on hard times due to over-expansion, poor management and accounting issues. Lawsuits followed, and the company appeared to be dead in the water. Between 2004 and 2009, it closed 240 stores. After losing money for five consecutive years, Krispy Kreme reported breakeven results in 2010 and has been profitable eight of the past nine quarters.

Last week, the company reported that second-quarter revenue rose 4.3% to $102.1 million, below the $104.5 million consensus estimate. However, earnings came in at 7 cents a share, beating the 5-cent consensus estimate, primarily due to an improvement in operating margins.

Same store sales grew 5.4% at company-owned stores, the 15th consecutive quarterly increase. Perhaps surprisingly to many investors, the company is growing again, and much of that growth is international. Krispy Kreme now has about 390 international franchises (compared to 141 domestic), and has plans to grow to 900 international locations by 2017. While still a work in progress, this company has come a long way.

Restaurant chain Cosi (COSI) provided a surprise of its own for the second quarter; the company turned its first-ever quarterly profit from operations. It was a very small profit, just $77,000, a drop in the bucket for a 133 restaurant chain, but even that was a monumental step for the company.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,843.39 +65.24 0.37%
S&P 500 2,075.47 +14.24 0.69%
NASDAQ 4,776.0110 +27.6150 0.58%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs