Alright degenerates, we need to talk. OPEN ripped. KSS followed. But these cycles always come in threes, and we're missing the final piece.
"History doesn't repeat but it does rhyme" \- so what's the next verse?
I think it's DNUT. But if you've got a better idea, drop it in the comments. Here's my case:
The Setup: OPEN your ahole and KSS DNUTz
Yeah, I went there. But while everyone's drunk on the first two gains, there's a $560M market cap company trading at bankruptcy multiples despite growing revenue.
Current Price: $3.58
Market Cap: $560M
My Target: $8-12
Show me another 2-3x opportunity this obvious.
The Valuation Gap Is Insane
Look at these multiples and tell me this makes sense:
|Company|EV/EBITDA|EV/Sales|Context|
|:-|:-|:-|:-|
|DNUT|9.2x|1.2x|Priced for bankruptcy despite growth|
|Starbucks|18.9x|3.57x|Premium coffee valuation|
|Restaurant Brands|17.0x|\~5x|Tim Hortons/BK parent|
|Dunkin' (2020 sale)|23x|N/A|What buyers actually pay for donuts|
Yet DNUT is:
- Operating 17,982 points of access globally
- Posted 5% organic growth in FY2024
- Has one of the most recognized brands in food
Find me another company this disconnected from fundamentals.
The Bear Cases Are All Weak
"Ozempic will kill fast food" \- I'm a fatass myself and there's no amount of Ozempic that removes my craving for hot, fresh donuts at 2am. Look at MCD and CMG at ATHs. People on Ozempic eat less, not never. A glazed donut is 190 calories of pure dopamine - that demand isn't disappearing.
"The McDonald's deal ended!" \- No, the TEST ended after rolling out to 2,400 stores. You think McDonald's spent millions on infrastructure for a 3-month trial? They're analyzing data. If it worked (spoiler: donuts + coffee = money), this goes nationwide.
"They suspended the dividend!" \- Good. They're investing in growth instead of paying boomers. That's exactly what you want in a turnaround.
Three Ways This Plays Out
Starting Point:
- Stock: $3.58
- Market Cap: $560M
- Growing business with fixable issues
Scenario 1: Modest Re-rate (12x EBITDA)
Still way below peers:
- Target: $8-9
- Return: 125-150%
Scenario 2: Industry Average (15x)
If operations improve:
- Target: $11-13
- Return: 200-250%
Scenario 3: Nothing Changes (10x)
Status quo maintained:
- Target: $5-6
- Return: 40-70%
Even the bear case would be a healthy return on your money. Show me better risk/reward.
Why The Setup Is Perfect
✓ Meme-able ticker (DNUT - come on)
✓ Small cap ($560M = moves fast)
✓ Value play (half peer multiples)
✓ Real business (17,982 locations)
✓ Catalyst rich (McDonald's decision pending)
✓ Acquisition target (at these multiples) ✓ Options flow confirming (Huge call buying at $5 strike)
Recent "Problems" Are Actually Bullish
- Q1 revenue down 1% → They sold Insomnia Cookies (portfolio cleanup)
- Dividend suspended → More cash for growth/turnaround
- McDonald's test "ended" → Infrastructure built, awaiting expansion
- Debt concerns → Manageable at 5x EBITDA, becomes nothing if margins improve
Every QSR turnaround story looks exactly like this before the re-rate.
But Here's Where I Need Your Input
I'm convinced DNUT is the third play because:
- Valuation \- It's the most undervalued name I can find
- Size \- Small enough to move like OPEN and KSS did
- Catalysts \- McDonald's decision, margin improvements, M&A potential
- Meme factor \- The ticker alone guarantees viral potential
- Options flow \- Big money is already positioning
But maybe I'm missing something. What else fits the pattern?
- Under $1B market cap?
- Trading at distressed multiples?
- Has clear catalysts ahead?
- Meme-able enough for WSB?
- Seeing unusual options activity?
Drop your picks below. But until someone shows me better risk/reward than 7:1 upside, I'm loading DNUT.