California Pizza Kitchen (CPKI), which I first discussed here on May 16, 2009, at a price of $13.53, continues to exhibit sideways action at or near $16.50. But I still like the business model at this stage. Here's why.

In 2011, CPKI's performance should improve as the U.S. economic recovery progresses. Look for same-store sales (in this case, restaurants) to rise about 2% to 2.5%, after a 3.3% decline in 2010.

The shares of California Pizza Kitchen (CPKI) first discussed here on May 15, 2009, at a price of $13.53, have meandered at/near $16.50 for the past three months, but I still like business model at this stage. Here's why:

In 2011, CPKI's performance should continue to improve as the U.S. economic recovery progresses. Look for same store sales (in this case, restaurants) to rise about 2.0% to 2.5% in 2011, after a roughly 1% dip in 2010.

Medtronic, Inc. (MDT) is expected to report Q2 earnings per share (EPS) on November 23. Overall option implied volatility of 27 is near its 26-week average, according to Track Data, suggesting nondirectional price movement.

Campbell Soup Company (CPB) is expected to report Q1 EPS on November 23. Overall option implied volatility of 18 is near its 26-week average of 19, according to Track Data, suggesting nondirectional price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

This spring, California Pizza Kitchen (CPKI) first discussed here on May 16, 2009 at a price of $13.53, made good on the March 2010, calculation to "stay the course" with the stock, only to retrench about 50%, then recover.

Talk about a wild ride, but forewarned is forearmed: as noted -- CPKI is a high-risk stock not suitable for low-risk/moderate-risk investors.

CPKI's 12-cent earnings per share performance in its March quarter was 3 cents above First Call's estimate, and that should have been enough to keep institutional investors interested.

Yesterday was a mixed day, and today was just a down day. Durable goods were a disappointment in negative territory. Earnings were mixed. The negative bias of the Fed's Beige Book coincides with the sell-off at 2:00 PM but this still just brings in the notion that there is going to be a slow recovery, rather than any massive double-dip recession.

Here are today's unofficial closing bell levels:

Dow Jones 10,497.88 -39.81 (-0.38%)
S&P 500 1,106.13 -7.71 (-0.69%)
Nasdaq 2,264.56 -23.69 (-1.04%)

I first discussed California Pizza Kitchen (CPKI) here on May 16, 2009, at a price of $13.53. Shares have resumed an uptrend -- making good on my March 2010 analysis to stick with CPKI -- and I still like the shares.

Note: I consider CPKI to be a high-risk stock not suitable for low-risk or moderate-risk investors.

California Pizza's first-quarter 10 cent earnings per share performance was in-line with Wall Street estimates, and that was more than enough to keep investors interested, given challenging restaurant sector conditions.

California Pizza Kitchen (CPKI), first written about here on May 15, 2009 at a price of $13.53, remains a close-call, from an investment standpoint, but the bias is to retain the play.

Note: I consider California Pizza Kitchen to be a high-risk stock not suitable for low-risk/moderate-risk investors.

The company reported another in-line earnings quarter in December, but revenue rose for the first time in five quarters, giving investors hope that the tide has finally started to turn in the 250-restaurant chain's favor.

Early Tuesday morning, Kraft Foods (KFT) announced that it is going to sell its North American pizza business for $3.7 billion. And of course, the natural purchaser of the pizza business is Nestle -- wait a sec ...

What does Nestle want with KFT's frozen pizza business? Well, in case you didn't know it, Nestle already holds the Stouffer's, Lean Cuisine, Buitoni, Hot Pockets, and Lean Pockets brands. The Swiss company will now add DiGiorno, Tombstone, California Pizza Kitchen, Jack's, and Delissio brands to its prepared dishes lineup. This addition is a major coup for Nestle, as its presence in the prepared-food world was already substantial -- and is now downright formidable. I would have to say that this is $3.7 billion well spent by Nestle.

It's a close call, but I'm now reiterating my buy rating and removing my hold rating for California Pizza Kitichen Inc. (CPKI), first recommended on May 15, 2009, at a price of $13.53.

Given the loss of more than 7.6 million jobs due to the recession (2007-2009), the outlook for the casual dining segment is obviously bearish. Simply, fewer Americans will be eating out, and the percentage of dinner-out meals is likely to continue to decline. Add an ongoing 'frugal consumer' trend and one can see why restaurant owners will face challenging times, to say the least, in the year ahead, and probably for longer.

Put California Pizza Kitchen (NASDAQ: CPKI), first recommended on May 15, 2009 at a price of $13.53, in the Hold category.

This stock is testing investors' patience. Casual dining restaurant chain California Pizza faces macro-headwinds in the 'frugal consumer' era, but the argument here is that the California market --- where the chain has a disproportionate number of restaurants --- has bottomed.

A restaurant chain stock? In this economy? Admittedly, the sector is replete with high-risk plays, but an impressive upside is possible, with the correct business model, And with the aforementioned in mind, California Pizza Kitchen (NASDAQ: CPKI) is worth a review.

California Pizza Kitchen offers a casual dining experience for the 'premium pizza' segment, but also features pastas and salads.

TheStreet.com's Jim Cramer says Panera is one company that has plenty of room for expansion.

If the restaurant stocks are stabilizing after a real downturn that has lasted for several weeks, this group -- a leadership group from the fall when gasoline fell in price -- is going to have a wicked move back.

I like Yum! Brands (NYSE: YUM) (Cramer's Take), which never broke down. This is one in which technicians signaled weakness, with Top Gun Rick Bensignor and I going head to head on "Mad Money." He was right that it initially would downtick, but I think it is bottoming along with McDonald's (NYSE: MCD) (Cramer's Take). It's got the growth and it has good tumbling raw costs. The dollar's going the way for both stocks.

Investors are expecting Wall Street to continue its recent winning ways.

Stocks are poised to open higher as investors await March retail sales data and the weekly unemployment report. Markets in Europe and Asia were higher.

Retail sales, though weak, may not be as bad as investors had feared. According to the Wall Street Journal, "Wal-Mart Stores and a select group of its discounting peers have helped retail sales exceed modest expectations every month since December, and that streak likely will continue."

The chain that once dubbed itself "where America shops" is increasingly a place shoppers avoid. Despite its much-publicized recovery efforts, investors should consider steering clear, too. Sears Holdings Corporation (NYSE: SHLD) has been in the news a great deal lately, announcing awful sales results and planning yet another stock buyback to prop up its flailing price.

The recent store changes have not worked, and neither will the financial engineering. This company is on its way down, and a visit to a local store showed me why.

Sears used to be the General Motors (NYSE: GM) of retailers -- an apt analogy when both were all-American giants, and just as apt today as both struggle. Sears had completely lost its way when vulture investor, Eddie Lampert, bought the company in late 2004 and combined it with Kmart. Wall Street analysts went nuts, pushing the stock price to $192 a share.

Today, Wall Street has lowered that price to near $40.

Analyst upgrades:

• Merrill upgraded Schering-Plough (NYSE: SGP) to Buy from Neutral citing the company's better near-term pipeline outlook with two potential blockbusters to be approved over the next year. Schering-Plough's target was raised to $23 from $20.
• Morgan Stanley lifted RadioShack (NYSE: RSH) and Texas Roadhouse (NASDAQ: TXRH) to Equal Weight from Underweight.

Analyst downgrades:

• Jefferies downgraded shares of Hologic (NASDAQ: HOLX) to Hold from Buy as they see limited near-term catalysts after the company reported a Q3 miss and lowered top-line guidance for FY08. The firm lowered their target to $24 from $28.
  
• Baird downgraded California Pizza (NASDAQ: CPKI) to Neutral from Outperform as they see limited near-term upside given the uncertain 2H08/2009 outlook. The company's target was lowered to $15 from $17.
  
• JP Morgan downgraded Jones Lang LaSalle (NYSE: JLL) and CB Richard Ellis (NYSE: CBG) to Neutral from Overweight due to the continued challenging economic environment.

Analyst initiations:

• BC Capital initiated Dollar Financial(NYSE: DLLR) with an Outperform rating and $24 target. The firm likes Dollar's geographically diversified business and valuation.