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Krispy Kreme stock rises following McDonald’s deal, analyst upgrade

Yahoo Finance co-hosts Seana Smith, Alexandra Canal, and Dave Briggs discuss Krispy Kreme's stock jump after their latest partnership with McDonald's.

Video transcript

[MUSIC PLAYING]

SEANA SMITH: Time for a Triple Play, three stocks that we're watching in the final 30 minutes of trading, final 10 minutes of trading today. We've got Krispy Kreme, Petco, and Starbucks. Kicking off with Krispy Kreme. Volume on the stock today soaring toward the seven times the typical average here. It's the biggest intraday jump that we have seen in just about 10 months. Now the move higher comes after Truist upgraded Krispy Kreme to a buy. They say that the deal with McDonald's to sell some of its donuts in select restaurants is quote underappreciate-- "underappreciated" and could help boost brand awareness and also potentially drive sales.

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They also think a normalization in the dollar will help Krispy Kreme, given the fact that the company has been growing its international exposure. Now shares has soared since the start of the year, skyrocketing more than, or just around 50% since January 1 here. And Ali, when we take into account everything that has happened with Krispy Kreme, obviously this McDonald's partnership I think is so smart. It's just in Kentucky. I think a lot of people, a lot of investors, shareholders want to know if they're planning to expand it beyond that, say, given the fact that it seems like it has been a success so far.

ALEXANDRA CANAL: I think they certainly should consider expanding it. And I do agree with this analyst that I think that is a largely underrated part of this business. And you were talking about some of the improvements in foreign exchange. And about a third of Krispy Kreme's sales comes from international markets. So that's a potential tailwind. This analyst also cited the fact that more people are returning to the office as a good play.

Also saying that Krispy Kreme is one of the few packaged goods companies to post meaningful volume growth in 2023. So as long as they can continue to add to that top line growth as competitors decelerate, that's a strong move for this buy rating.

DAVE BRIGGS: Yeah, this is really the new fast food wars, is breakfast. Jumping off the McDonald's aspect of this, Wendy's is pouring money into it, Taco Bell is pouring money to it. Obviously, Dunkin' Donuts is pouring money into it. And they're going with breakfast tacos is their new launch. In fact, just launched breakfast tacos today.

And Taco Bell's CEO, Mark King, said, we have to go after McDonald's. It represents A billion dollar sales opportunity. We have to commit to beating our rivals. This is really the place to watch. What used to be the chicken sandwich wars I think is now the extra opportunity of breakfast. And that's what to watch for all these fast food companies in the years ahead.