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Investors find Dunkin' IPO warm and tasty

/ Source: msnbc.com staff and news service reports

What's warm and tasty and selling like hotcakes? Shares of Dunkin' Brands, which made their debut on Wednesday by soaring nearly 50 percent above their offering price.

On Tuesday, the parent of the Dunkin' Donuts coffee chain and Baskin-Robbins ice cream stores sold $422.75 million worth of stock at $19 a share in the biggest initial public offering of the week. The stock closed at $27.85 in Nasdaq trading Wednesday, up 47 percent.

The company's new market value of more than $3 billion is still significantly smaller than rivals McDonald's Corp. and Starbucks Corp., but the Dunkin' Donuts chain has a devoted U.S. following and plenty of room for domestic growth, particularly on the West Coast.

The chain, whose advertising slogan is "America Runs on Dunkin,"' also has opportunities to expand in international markets, where it already has 3,000 outlets.

The market's really going to like the growth story," said Morningstar senior analyst Joscelyn MacKay. "Even though the Dunkin' Donuts brand has been around for 70 years, there's still great potential for the brand to increase its awareness around the United States."

Dunkin' Donuts sells coffee drinks, doughnuts and other foods like bagels and sandwiches. It is the primary growth engine for Dunkin' Brands, which gets 60 percent of its revenue from coffee.

Dunkin' Donuts customers are the most loyal in the U.S. coffee segment, ahead of fans of Starbucks, McDonald's and Canadian chain Tim Hortons Inc., according to consulting firm Brand Keys Inc.

After the offering three private equity firms that sold shares still own as much as 78 percent of the company.

Shares trade under the ticker symbol "DNKN."