Momentum Stock: Cheesecake Factory, Inc.

Cheesecake Factory, Inc. (CAKE: 28.81 0.00 0.00%) recently jumped to within striking distance of its multi-year high after reporting solid Q3 results that included a 9% earnings surprise. With estimates on the rise and a bullish growth projection, this Zacks #1 rank stock is a VIP member of the momentum club.

Company Description

The Cheesecake Factory, Inc. owns and operates more than 165 upscale, full-service restaurants in the United States. The company was founded in 1972 and has a market cap of $1.7 billion.

The stronger global economy of the last 12 months has helped retailers and restaurants alike as consumer regain the confidence so spend discretionary income. That dynamic lifted CAKE to solid third-quarter results on October 21 that came in ahead of expectations.

Third-Quarter Results

Sales for the period were up 4.5% from last year to $418 million. Earnings also came in strong at 37 cents, 9% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 13% over the past four quarters.

Same-store sales at the company's flagship restaurant Cheesecake Factory were up 2.8%.

Margins looked solid too, with operating margin up 70bps from last year to 7.5%.

Strong Balance Sheet

The company also gave its balance sheet a nice boost, reducing its debt by $60 million from the beginning of the year to $40 million, dropping its interest expense in the quarter to $1.8 million from $5.8 million.

Buying Shares Back

The Cheesecake Factory was also busy buying its stock, repurchasing 911,724 shares over the quarter for $21.2 million, where the company has now bought back over 2 million shares on the year for $51 million.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year adding 4 cents to $1.42 and the next-year estimate adding 6 cents to $1.66, a bullish 17% growth projection.

Valuation

In light of recent gains, the valuation picture is running a little hot, with a forward P/E of 21X against its peer average of 17X.

2-Year Chart

On the chart, shares jumped higher on the good quarter to move within striking distance of the multi-year high at $30.75. The MACD below the chart is bullish too, with the short-term average trending ahead of the long-term average. Look for support from the trend line and short-term low on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

Uranium Mining Stocks Just Beginning Its Major Move

Uranium miners that are close to production in Wyoming are gaining a lot of enthusiastic interest from investors over the past few weeks.   Some of the miners out of Wyoming have made huge percentage gains such as Uranerz (URZ: 2.22 0.00 0.00%), UR Energy (URG: 1.40 0.00 0.00%), Cameco (CCJ: 30.50 0.00 0.00%) and Uranium One (TSX:UUU) as more mines are expected to receive permits to begin operation. There are thirteen mines being developed in Wyoming.  Wyoming produces the largest amount of domestic uranium with Cameco's (CCJ) Smith Ranch Mine which is also the largest U.S. facility.

There have been recent developments with the recent issuance of the Moore Ranch project to Uranium One which is partially owned by the Russian Government.  Just recently Uranium One's Moore Ranch received its NRC license, which is the first uranium mine to be permitted in several years and was a major milestone for the industry.  Unfortunately for them due to Uranium One being largely owned by the Russian government, congressional members wrote a letter that shows their concern of U.S. uranium possibly supplying Iran. America is one of the largest consumers of uranium and a lot of the supply of uranium comes from nuclear warheads from Russia.  More than 90% of uranium used in this country is imported.  However, that program with Russia is coming to an end by the end of 2013 and the U.S. will need to find alternate supplies.  Investors realizing this crunch are buying these miners with great enthusiasm.  Right now the new mines from Wyoming are key to the future of power generation in the United States.  Investors are seeing this concern about future local uranium supply.  A concern is that many foreign countries are controlling U.S. uranium which is vital to this countries future power generation.  These small miners will be acquired at premiums or be subject to hostile takeovers in 2011 as they move closer to production.  Cameco (CCJ) recently had an off take agreement with China which will also put pressure on supply over the next few years.  I expect more agreements with miners to be announced as foreign investors scramble for future supply.

I believe these assets provide dollar diversification in low risk mining jurisdictions.  Uranium could move parabolic as more power plants are built and there is not enough uranium available.

Wyoming is a friendly mining jurisdiction and many of these projects are in-situ mining, which means they have to dispose of water.  Groundwater contamination is the greatest concern for local residents.  Investors must research which projects have local support and permits for water disposal as the Environmental Protection Agency could hold a project up for this reason.

Although many commodities have reached new highs the uranium stocks are just beginning its major move.  The growth in nuclear and the supply demand constraints will drive uranium prices very high.  These uranium miners who will progress into production  The U.S. has over 20% of its power comes from nuclear power plants.  There has also been bilateral political support to increase nuclear energy to reduce carbon emissions and is an essential component of the clean energy push.  Expect to hear more news of acquisitions as miners make progress and move closer to production.

Growth & Income Stock: McDonald's Corp

Shares of McDonald's Corp (MCD: 77.48 0.00 0.00%) have been on a roll lately. The world renowned fast-food giant went through the Great Recession virtually unscathed as cash-strapped consumers flocked to the company's Value Menu.

Investors have flocked to the stock as McDonald's continues to deliver impressive results by sticking with what it does best – delivering food fast and cheap – and also expanding its menu to offer deluxe coffees and smoothies.

The company recently delivered another strong quarter, prompting analysts to raise their estimates.

Third Quarter Results

On October 21, McDonald's reported third quarter earnings per share of $1.29, beating the Zacks Consensus Estimate by 5 cents. It was a 15% over the same quarter in 2009.

Total sales grew 6.0%, including a 5.3% jump in the U.S. Same-store sales in the U.S. improved 5.3%, largely due to strong sales from the company's Frappes and Smoothies.

Sales growth was particularly strong in the company's Asia/Pacific, Middle East and Africa division, which saw a 16% increase year-over-year.

The company was able to manage expenses well, as operating income grew 11%.

Outlook

Management does not give specific earnings per share guidance, but in the latest earnings release the company stated that it expects comparable sales growth of 5% to 6% in October.

Since the company's recent earnings beat, most analysts have raised their estimates for 2010 and 2011 higher. The Zacks Consensus Estimate for 2010 is $4.60, a 15% increase from 2009 EPS.

The 2011 estimate is $5.02, representing 9% annual growth.

Dividend

McDonald's has paid a dividend every year since 1973. In September, the company announced an 11% dividend increase. Since 2000, the company has raised it at a compound annual growth rate of 26.3%.

The stock yields a very stable 3.1%.

Valuation

Shares are looking a little pricey but not unreasonable. The stock trades at 17.1x forward earnings, a slight premium to the industry average of 15.9. Its PEG ratio is a bit on the high side at 1.9.

McDonald's has an outstanding 20.6% net margin, well above the peer group average of 3.3%. This justifies its higher price to sales ratio of 3.5, compared to the average of 0.5.

The company also has an excellent return on investment of 20.1%, trumping the industry average of 7.9%.

About MCD

There are over 32,000 McDonald's restaurants in 117 countries. Approximately two-thirds of total revenue come from outside the United States.

McDonald's is based in Oak Brook, Illinois. It is a Zacks #2 Rank (Buy) stock.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

Momentum Stock: Monro Muffler Brake, Inc.

Monro Muffler Brake, Inc. (MNRO: 47.40 0.00 0.00%) is looking like a Momentum all-star, recently hitting a new all-time high ahead of its excellent Q2 results that came in ahead of expectations. With consistent earnings on the board and a bullish growth projection, this Zacks #2 rank stock is tipping the momentum scale.

Monro provided the Street with an update on its business on Oct 21 with solid Q2 results that once again beat expectations.

Second-Quarter Results

Revenue for the period was up 19% from last year to $162 million. Earnings also looked good at 63 cents, 3% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 7% over the last four quarters.

Although the results were helped by acquisitions, same-store sales were still awesome, up 6.4% after growing 7.4% in the same period last year, with tires, shocks and maintenance services leading the way with 10%, 9% and 8% growth respectively.

Solid Balance Sheet

Monro has also been busy strengthening its balance sheet, with its total debt down $11 million from last year to $89 million against a marginal cash position of $3 million. Its debt-to-equity ratio of 35% is well ahead of the industry average of 49%.

Guidance

Monro also boosted its guidance on the good quarter, saying it now expects fiscal 2011 EPS between $2 and $2.06, up from the previous $1.94 to $2.01.

Valuation

Although shares trade with a forward P/E of 23X, its PEG ratio of 1.09 is only a pinch away from the value benchmark of 1.0.

2-Year Chart

On the chart, shares have been trending higher for most of the last 18 months before recently hitting a new multi-year high at $50.81 ahead of the good quarter. But in spite of the gains, the stochastic below the chart is signaling that shares are trading well away from over-bought territory, take a look below.

Read the Aug 16 MNRO article here

Last Week's Momentum Zacks Rank Buy Stocks

Caterpillar, Inc. (CAT: 78.33 0.00 0.00%) just reported another awesome quarter that handily beat expectations, sending shares to within striking distance of the multi-year high at $81.19. With strong demand coming from both developed and emerging markets, this Zacks #1 rank stock has plenty of upward momentum. Read Full Article.

Polo Ralph Lauren Corp. (RL: 94.03 0.00 0.00%) recently traded within striking distance of its multi-year high as the company's earnings rebound on a better consumer environment. With an average earnings surprise of 41% over the last four quarters and a bullish next-year estimate, this Zacks #1 rank stock offers some nice momentum. Read Full Article.

Tim Hortons, Inc. (THI: 37.54 0.00 0.00%) recently hit a new multi-year high at $37.67 after rallying with the market in September. With a bullish next-year estimate and strong industry rank, this Zacks #1 rank stock is a picture of momentum. Read Full Article.

Columbia Sportswear Co. (COLM: 52.53 0.00 0.00%) recently hit a new multi-year high ahead of its Q2 results set for Oct 21. With an average earnings surprise of 43% over the last four quarters and a strong industry rank, this Zacks #1 rank stock has plenty of upward momentum.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

Stocks Approaching Breakout Levels: Mentor Graphics, Cabela’s, O’reilly Automotive, Superior Energy Services, TJX Companies

Here is a watchlist of some stocks that have been consolidating nicely for the past few days. The way I like to play these kind of setups is by buying them on break of important resistance levels, preferably on volume. Another way you could possibly play them is by getting in on test of support i.e. on bottom end of the range. Below the consolidation range would be one option to place your stops.

Sure, you can take a partial position now too and then add on the break of resistance. No matter which way you decide to play them, be sure to check out the earnings date for when these stocks are reporting. I have mentioned the important resistance levels along with the stocks.

Mentor Graphics (MENT: 10.80 0.00 0.00%) – Break of 11.

Cabela's (CAB: 19.12 0.00 0.00%) – Break of symmetrical triangle

O'reilly Automotive (ORLY: 54.0225 0.00 0.00%) – Break of 54.50

Superior Energy Services (SPN: 27.22 0.00 0.00%) – Break of 27.50

TJX Companies (TJX: 44.86 0.00 0.00%) – Break of 45.50

Euro Zone Industrial New Orders Rise More-than-expected

Forex Pros – Industrial new orders in the euro zone rose significantly more-than-expected in August, official data showed on Monday.

In a report, Eurostat said that industrial new orders rose by a seasonally adjusted 5.3% in August, after falling by 2.0% in July, whose figure was revised down from a decline of 2.4%.

Analysts had expected industrial new orders to rise by 2.1% in August.

The report also showed that the annualized rate of industrial new orders in the euro zone rose by 24.4% in August, after rising by 11.7% in July. Analysts had expected the annualized rate of industrial new orders to rise by 19.3% in August.

Following the release of that data, the euro was up against the U.S. dollar, with EUR/USD gaining 0.51% to hit 1.4027.

Meanwhile, European stock markets were up. The EURO STOXX 50 gained 0.48%, France's CAC 40 added 0.60%, Germany's DAX was up 0.74% and the FTSE 100 rose 0.67%.