Wed, Jun 19, 2013, 6:19 PM EDT - U.S. Markets closed
Wrote this in early December:
"Really looks like a stellar take out target.
They are large enough to be an established BRAND while still being small enough to:
1. Acquire at a reasonable cost
2. Be able to grow SIGNIFICANTLY over the next 8 to 10 years + in the right hands.
A well run profitable company with a strong balance sheet.
They look like prime target material."
- - - - - - - - - - - -
Think it is truer today than ever.
Still think a REASONABLE acquisition cost is upper teens to very low $20's currently.
And the GROWTH plans are now clear, concise and communicated (only thru 2016...what about thru 2020?).
The BRAND is a major asset.
KKD came to the market 12 years ago with an exciting established beloved brand and potential. The stock soared!
Simply put...previous management BLEW it in 2002-2006.
Now...after being FIXED...all the potential of 10 years ago is still present...just waiting to be tapped.
McDonalds, Dunkin Donuts, Starbucks - are they looking to take advantage of that potential??
As you can see in that video this morning....
All three people LOVED KKD product versus the competition.
This is at the essence of why KKD is likely going to run big over the coming years...OR get bought.
One or the other.
Right now they are being accumulated by the smart money while the rest sit back and "wait for a pullback". The recognition phase for the smart money has arrived in the last couple weeks.
A 25% LONG TERM grower (whether in sexy technology segment or boring old food) generally gets a premium multiple.
25 PE x $.56 = $14 (bottom target if estimate is accurate)
Assume a healthier estimate of $.64
25 PE x $.64 = $16
Apply a premium multiple
30 PE x $.64 = $19.20
35 PE x $.64 = $22.40
Near term levels to watch:
Base Bullish: $16
Super Bullish: $22.40