Will CRMB be the next BAGL, THI and Krispy Kreme (KKD, BAGL & THI)

High End Cupcakes will lead to Higher Stock Prices

Oct 3, 2011 6:24:56 AM PDT | 771 View(s) | No Comment(s) - Post a Comment Rating

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StockHQ:

KKD
$17.86 +$0.85 +5.00%
THI
$54.93 +$1.99 +3.76%
BAGL
$14.24 +$0.18 +1.28%
CRMB
$1.24 -$0.04 -3.13%

Speciality food shops such as 57th Street Acquisition (NASDAQ: CRMB), Einstein Noah Food Group (NASDAQ: BAGL), Tim Hortons Inc (NYSE: THI) and Krispy Kreme (NYSE: KKD) offer treats in many ways to investors. A recent piece in Smart Money magazine about Crumbs Bake Shop and its merger with 57th Street General Acquisiton by Jen Wieczner, "Treasure Hunt: Baking It," mentioned that revenues are expected to increase to $45 million this year from last year's $31 million.

But the share price for CRMB has not reflected this upside. The stock had its initial public offering in May and quickly rose to $16 a share. It is now around $4, a 75% plunge.

The financials for the future for CRMB are promising while the present numbers more than explain the drop. Returns on asset, equity and investment are all negative. Both the operating and profit margins are in the red, too. Earnings per share, on a quarter by quarter basis, are off by more than 120%.

The stock price has responded accordingly. For the month, it is down almost 40%. For the quarter, it is down almost 70%. Year to date, it is down about 60%.

For the past week, however, it is up almost 5%. Sales, on a quarter by quarter basis, have increased more than 30%. Earnings per share for next year are expected to rise over 200%. The quick ratio is 6.12 and the current ratio is 6.30.

There are other positive signs for investors to bite into. The mean analyst recommendation is 2, which is positive (1 is buy, 5 being a sell). The short float is only 0.04%. There is no debt.

When speciality food shops catch on, the returns can be very tasty for investors. In troubled economic times, consumers will cling to inexpensive luxuries like designer coffee and high end cupcakes. As revenues rise from more cupcakes being sold at Crumbs Bake Shop, so will the stock price.