Restaurant Stock Has Room to Run

Cheesecake Factory Inc (NASDAQ:CAKE) could jump to a fresh one-year high, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Down 2.1% to trade at $36.17 at last glance, CAKE is pacing for its fourth loss in five sessions. Bulls shouldn't fret yet, though, as this pullback has placed Cheesecake Factory stock within one standard deviation of its 60-day moving average.

In the last three years, the shares saw six similar signals, and averaged a one-month gain of 18.2% in all of those instances. From CAKE's current perch, a move of similar magnitude would place it near $43.

The stock is already up 14.1% year-to-date, outpacing the AdvisorShares Restaurant ETF's (EATZ) 9.5% gain in the same timeframe. This points toward underlying strength in the restaurant sector, even as consumers face higher-than-usual inflation.

There's plenty of pessimism to unwind that could fuel gains. Specifically, 11 of the 14 covering analysts say a "hold" or "strong sell," which leaves Cheesecake Factory stock open to a round of bull notes. Meanwhile, the shares sold short account for 19.5% of the security's total available float.

Options traders favor puts, meaning a sentiment could create additional tailwinds. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CAKE's 50-day call/put volume ratio of 4.23 sits higher than 98% of readings from the past 12 months.