Cheesecake Factory (CAKE) is an Incredible Growth Stock: 3 Reasons Why

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. However, it isn't easy to find a great growth stock.That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.Our proprietary system currently recommends Cheesecake Factory (CAKE) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).Here are three of the most important factors that make the stock of this restaurant chain a great growth pick right now.Earnings GrowthEarnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.While the historical EPS growth rate for Cheesecake Factory is 25.5%, investors should actually focus on the projected growth. The company's EPS is expected to grow 22.5% this year, crushing the industry average, which calls for EPS growth of 6.4%.Impressive Asset Utilization RatioAsset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.Right now, Cheesecake Factory has an S/TA ratio of 1.23, which means that the company gets $1.23 in sales for each dollar in assets. Comparing this to the industry average of 0.97, it can be said that the company is more efficient.While the level of efficiency in generating sales matters a lot, so does the sales growth of a company. And Cheesecake Factory is well positioned from a sales growth perspective too. The company's sales are expected to grow 3.9% this year versus the industry average of 2.6%.Promising Earnings Estimate RevisionsSuperiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.The current-year earnings estimates for Cheesecake Factory have been revising upward. The Zacks Consensus Estimate for the current year has surged 2.6% over the past month.Bottom LineCheesecake Factory has not only earned a Growth Score of A based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.This combination positions Cheesecake Factory well for outperformance, so growth investors may want to bet on it.Free Report: 5 Clean Energy Stocks with Massive UpsideEnergy is the backbone of our economy. It’s a multi-trillion dollar industry that has created some of the world’s largest and most profitable companies.Now state-of-the-art technology is paving the way for clean energy sources to overtake “old-fashioned” fossil fuels. Trillions of dollars are already pouring into clean energy initiatives, from solar power to hydrogen fuel cells.Emerging leaders from this space could be some of the most exciting stocks in your portfolio.Download Nuclear to Solar: 5 Stocks Powering the Future to see Zacks’ top picks free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks