With the market now in a correction, it' s a good time to pay
attention to stocks that are holding up amid adversity.
Dunkin' Brands (
) is one such issue. Besides showing relative strength, it also
offers robust profit growth.
Even though the Nasdaq and the S&P 500 have fallen nearly
2% each for the week through Wednesday, Dunkin' was mostly flat.
The stock staged a big upside reversal near its 10-week moving
average last week. On its weekly chart, the stock's Relative
Strength line has already hit a new high ahead of price -- a
On another positive note, mutual fund ownership of the July
2011 IPO has increased in the past four quarters. At the end of
the first quarter, 322 funds owned the stock, up from 251 a year
The doughnut, coffee and ice cream chain lost money in 2008,
but was back in the black in 2009. Profit has grown sharply ever
since. In 2012, Dunkin' earned $1.28 a share, up from 28 cents in
2009. It has also delivered rising pretax margins in recent
Dunkin' has a three-year Earnings Stability Factor of 13,
indicating a steady stream of profits. Top-performing growth
stocks tend to have stability figures of 25 or below.
Analysts polled by Thomson Reuters see profit rising 20% to
$1.53 a share this year. The estimate was recently revised
Dunkin' started paying shareholder dividends in the first
quarter of 2012 and hiked it once since then. In January, the
company raised its dividend to a quarterly rate of 19 cents a
share, up from 15 cents.
On an annual basis, Dunkin' pays 76 cents a share, which works
out to a yield of 1.8%. This is one of the lowest yields in the
Retail-Restaurants group. But Dunkin' has one of the highest
Composite Ratings among its peers at 97.