Cheesecake Factory stock is up 15% already in 2021
The Cheesecake Factory Incorporated (NASDAQ:CAKE) is up 2.4% to trade at $42.56 today, a chip-shot from its Feb. 20 annual high of $43. Today's bump comes after Wedbush and Deutsche hiked their price targets to $49 and $47, respectively, and puts the stock's year-to-date gain already as 15%.
The analyst shift is no surprise, considering CAKE has nearly tripled off its March 17 decade lows of $14.52. Nevertheless, nine of 16 analysts in coverage maintain "hold" or worse ratings. Plus, the consensus 12-month price target of $37.41 is a 12.3% discount to its current perch. In other words, more bull notes could be on the horizon for the restaurant stock.
There are two competing indicators facing off for CAKE. First, there's the stock's 14-day Relative Strength Index (RSI) of 77, indicating that the stock is well into "overbought" territory. However at the same time, a healthy 26.6% of CAKE's total available float is sold short, and the ascending 80-day moving average has guided the equity higher in recent months.
Regardless of direction, now looks to be an attractive time to bet on the restaurant stock's next moves with options. This is per Schaeffer's Volatility Index (SVI) of 54%, which sits in the 10th percentile of its annual range. In simpler terms, options players are pricing in relatively low volatility expectations right now.
Like all too many companies in the food and restaurant industry, The Cheesecake Factory posted some significant losses in 2020. The company lost about $300 million in net profits and revenue over the past year. CAKE also suspended its quarterly dividend back in May of 2020. However, The Cheesecake Factory has likely already endured the worst of the pandemic. With many other restaurants forced to close, CAKE investors are hoping the company can capture a greater percentage of the market share. CAKE’s historically sound revenue growth and its diverse restaurant concepts make the company an intriguing candidate to come out much stronger than it was prior to the COVID-19 pandemic.