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Cheesecake Factory rises after added to 'Buy' list

Shares of The Cheesecake Factory Inc. rose on Wednesday after an analyst added the company to a list of preferred stocks and said the restaurant operator will post stronger sales as mall customer traffic improves.
/ Source: The Associated Press

Shares of The Cheesecake Factory Inc. rose on Wednesday after an analyst added the company to a list of preferred stocks and said the restaurant operator will post stronger sales as mall customer traffic improves.

Shares rose 75 cents, or 4 percent, to $19.69 in midday trading.

Steven T. Kron of Goldman Sachs added the company to "Americas Conviction Buy List," saying Cheesecake Factory's sales are tracking close to mall-based retailers such as Nordstrom, Saks and Neiman Marcus. Many of Cheesecake Factory's restaurants are located in malls and shopping centers.

"Cheesecake is likely to be among the biggest beneficiaries of the improvement in higher-end spending we have seen across restaurants and retail in recent months," Kron wrote in a client note. He expects cost-savings to boost margins, as well.

Last month, Kron upgraded the stock to "Buy" from "Neutral."

Cheesecake Factory in October third-quarter profit rose 38 percent as it slashed $8 million in costs and added new menu item. The analyst said that stronger sales will boost earnings next year.