Could Krispy Kreme Doughnuts (KKD) Rise from the Dead?

Over the past 12 months, Krispy Kreme Doughnuts Inc (KKD) shares have traded between $2.56 and its 52-week high of $5.15.  Krispy Kreme Doughnuts shares are now trading with a P/E Ratio of 108.5 and EPS of 0.03.

In July, Moody's said Krispy Kreme was able to cut its debt by more than 40 percent since the beginning of 2009. Furthermore, its rate of revenue decline has begun to slow and margins have improved.

Krispy Kreme has struggled for years to turn around its business following a low-carb dieting craze that damaged the company's prospects in the midst of a rapid growth spurt.

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The company reported a loss in 2009 but rebounded in the fiscal first quarter, when its earnings more than doubled, helped by a sharp drop in interest expense and growth at stores open at least a year.

Fellow Stockmasters, KKD is till a speculative stock. But the company is actually starting to turn a profit, and their forward P/E is now 24.93. Not bad for a company that some thought would go bankrupt in recent years. KKD is a great turnaround story  and shares could indeed start showing some life.