Kyle McKay Cheesecake Factory Inc (The) CAKE-Q TOP PICK Jul 03, 2003

*Short* This has been a great performing stock. It is at a 52-week high today, but thinks it has peaked out, both on the margins and the dairy portion. It has been one of the few restaurant chains that has been able to raise prices, but that is pretty much tapped out. Also, they are 90% impacted with the whole mall experience in a secular decline. He is not looking for a big hit on this, but something back into the $50s or high $40 level. Yield of 1.57%. (Analysts’ price target is $58.40.)

It was trading at $49 when a large order occurred; he started started buying $55 October calls. Today, it's making a nice 3-4% move. It's more than tripled since the Covid bottom. He will hold them for two months.

Sells at 11x PE, pays a great yield and shares are up 6% in the last month

In Q1, staff retention improved further to help lift sales growth, has been improving their menu (capturing food trends, like adding vegetable dishes), and are opening more locations this year. Likes the company, but shares have run up hard this year. Wait for their next report though he expects another beat.