Jun. 6--Krispy Kreme Doughnuts Inc. appears on the road toward financial recovery and profitability after five years in corporate purgatory.

However, getting analysts and investors to care will be challenging considering Krispy Kreme is barely on the radar screen of both groups these days.

Having its share price plunge from $108.50 in November 2000 to a recent low of $1.01 on Feb. 18 has produced a "burn me once, shame on you, burn me twice, shame on me" perspective on the company.

Most analysts dropped coverage in the past three years because of previous questions about Krispy Kreme's finances.

Krispy Kreme's turnaround strategy "is in place and moving forward," said Tony Plath, a finance professor at UNC Charlotte.

"But will the capital market forgive Krispy Kreme's past transgressions and provide the financing necessary to make it happen at reasonable cost?" Plath said.

"Or will the market force Krispy Kreme to find a business partner with deeper pockets, and a less sullied reputation, among institutional investors and lenders?"

Krispy Kreme has taken significant financial and legal steps in recent months.

The company reported Thursday its second quarterly profit -- $1.9 million -- in its last five. Its strategy of expanding its international and domestic presence through smaller stores is gaining traction. It reduced its debt by $20 million during the previous quarter.

In March, Krispy Kreme and three former executives resolved a major corporate headache by reaching a settlement with the Security and Exchange Commission concerning quarterly and annual earnings from February 2003 to May 2004.

"There'll be setbacks and there'll be bumps along the road," James Morgan, the company's chairman and chief executive, said during a conference call with analysts Thursday. "The signs of progress we saw in the first quarter actually make me more enthused than ever about our long-term prospects.

"We believe our small-store concept, paired with a broader menu (including baked goods), will be the foundation that sets the stage for our domestic growth in the years ahead," Morgan said.

Krispy Kreme declined to make further comment for this story.

Still, the company has plenty of investing red flags to overcome.

Morgan is the company's fourth top executive in 4 1/2 years.

Krispy Kreme's market capitalization of $244.4 million is low for small-cap companies, typically defined as below $5 billion.

"In general, analysts don't like to bother covering stocks with small market capitalizations.