Sweet Profits

Years ago, a friend who visited Los Angeles told me about a line half a block long outside a Krispy Kreme doughnut shop. When it went public in 2000, I bought some shares at $36. Over just about a year, the stock rose and split twice. I sold half of my stake between the splits and the rest in 2002, netting a 190 percent gain in less than two years.

— W.L. Fink, Escondido, Calif.

The Fool Responds: You did well, especially in your selling of the stock, as it has recently been trading for around $1.40 per share. Investors were very excited about Krispy Kreme at first, many swayed by the devotion of its fans. But it's not enough for a company to have a popular product. The company must also manage its finances, operations and growth effectively. Krispy Kreme's revenue has been falling over the past few years, as it struggles to turn its losses into gains. It may well turn itself around, but for now, there are much safer investments around.

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