NEW YORK ( TheStreet) -- TheStreet's Jim Cramer and Nicole Urken, "Mad Money" research director, discuss Krispy Kreme's ( KKD) long-term prospects and whether investors should consider the stock.
Krispy Kreme's CEO James Morgan is focusing on slower-paced growth, since the company has tended to grow too rapidly in the past, Cramer said. Although it angers analysts, management notes that it has tried that route before and it ended poorly, with the stock cratering from nearly $50 down to about $2, Cramer also said. Both Starbucks ( SBUX) and McDonald's ( MCD) have gone through a similar growth pattern, Urken said. Both companies ended up scaling back to focus on value. They also focused on international exposure and are now much better off because of it, Urken also said. According to Cramer, the path to long-term growth is certainly there for Krispy Kreme. He said the company represents a nice takeover opportunity for a bigger company. With new products, a dominant position in the doughnut space and by selling expensive coffee (which is inexpensive to make), Krispy Kreme has a lot going for it at the moment, Cramer said. Urken suggested that it might be a good speculative position for long-term investors, but warned that the stock has been on a bit of a run this year. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.-- Written by Bret Kenwell in Petoskey, Mich. . Follow @traderboy23