Trade-Ideas LLC identified

Cheesecake Factory

(

CAKE

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cheesecake Factory as such a stock due to the following factors:

  • CAKE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.7 million.
  • CAKE has traded 187,631 shares today.
  • CAKE traded in a range 246.4% of the normal price range with a price range of $2.73.
  • CAKE traded above its daily resistance level (quality: 114 days, meaning that the stock is crossing a resistance level set by the last 114 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on CAKE:

The Cheesecake Factory Incorporated operates full-service and casual dining restaurants primarily in the United States. The stock currently has a dividend yield of 1.6%. CAKE has a PE ratio of 21. Currently there are 4 analysts that rate Cheesecake Factory a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Cheesecake Factory has been 715,500 shares per day over the past 30 days. Cheesecake Factory has a market cap of $2.4 billion and is part of the services sector and leisure industry. The stock has a beta of 0.14 and a short float of 14.2% with 6.69 days to cover. Shares are up 7.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cheesecake Factory as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • CHEESECAKE FACTORY INC has improved earnings per share by 21.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHEESECAKE FACTORY INC increased its bottom line by earning $2.31 versus $1.98 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $2.31).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 6.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $76.31 million or 16.77% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.09%.
  • CAKE's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.37 is very weak and demonstrates a lack of ability to pay short-term obligations.

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