Analyst Upgrades

• Goodrich (GR) to overweight from neutral at JPMorgan.
• Ford (F) to neutral from underperform and CenterPoint Energy (CNP) to outperform from neutral at Credit Suisse.
• Dollar Financial (DLLR) and Edwards Lifesciences (EW) to buy from hold at Jefferies.
• Alterra Capital (ALTE) to buy from hold at Deutsche Bank.
• Cheesecake Factory (CAKE) and P.F. Chang's (PFCB) to buy from neutral, as well as SunTrust (STI) to neutral from sell, at Janney Capital.
• Arch Capital (ACGL), Axis Capital (AXS), PartnerRe (PRE), Everest Re (RE) and Transatlantic (TRH) to buy from hold, as well as W. R. Berkley (WRB) to hold from sell, at Citigroup.
• Optimer Pharm (OPTR) to buy from neutral at BofA/Merrill.

Cheesecake Factory (CAKE), first discussed here on June 25, 2009, at a price of $16.30, has survived the restaurant sector's major consolidation period, and I obviously still like the business model at this stage.

Cheesecake's shares have recently dipped to $29, after accelerating to $34 in December, but investors who can tolerate the risk should view the pullback as an opportunity.

Analyst Upgrades

• Union Pacific (UNP) and Polycom (PLCM) were upgraded to outperform from market perform at Wells Fargo.
• Time Warner Cable (TWC) was upgraded to outperform from sector perform at RBC Capital.
• Cheesecake Factory (CAKE) was upgraded to neutral from underweight at JPMorgan.
• LaSalle Hotel (LHO) was upgraded to outperform from neutral at RW Baird.
• Graco (GGG) was upgraded to buy from hold at BB&T.
• Valley National (VLY) was upgraded to market perform from underperform at Keefe Bruyette.
• Credit Suisse (CS) was upgraded to hold from sell at RBS.
• U.S. Bancorp (USB) was upgraded to outperform from perform at Oppenheimer.
• Penn National (PENN) and Riverbed (RVBD) were upgraded to buy from hold at Jefferies.
• Goodrich (GR) was upgraded to outperform from neutral at Cowen.
• Amazon.com (AMZN) upgraded to buy from average at Caris.

The shares of upscale dining chain Cheesecake Factory (CAKE), first discussed here on June 25, 2009, at a price of $16.30, appear to have bottomed after a summer swoon, and I obviously still like the shares.

Cake reported second quarter earnings of 39 cents per share, excluding items, 1 cent above the First Call estimate, and look for a similar, in-line performance in third and fourth quarters.

Further, 162-restaurant CAKE also has generated revenue roughly in-line with analysts estimates, and should total about $1.65 billion in FY2010, or a roughly 2.0% to 2.2% increase.

Readers of this space know that restaurant chains are opposed, for several reasons. However, every once in a while a chain forms that exceeds the segment's lamentable cuisine offerings, and still manages to make a buck.

The Cheesecake Factory Incorporated (CAKE), first discussed here on June 25, 2009 at a price of $16.30, is one.

The best financial reason to hold on to CAKE? The U.S.'s 'frugal consumer' era has hit the restaurant sector hard, and there will be restaurant chain casualties, but Cheesecake won't be one. Don't expect anything spectacular revenue-wise from CAKE in FY2010 -- flattish to slightly higher same store sales, and only a slight increase in revenue, with most likely a grand total of three -- count 'em, three -- new restaurants opened under its upscale casual dining format.

Cheesecake Factory (CAKE), first discussed here on June 25, 2009, at a price of $16.30, has raced ahead. My initial inclination would be to take the roughly 65% gain, but several fundamentals override that stance.

The primary reason to hold on to CAKE? The U.S.'s "frugal consumer" era has hit the restaurant sector hard, and there will be many chain restaurant casualties, but I don't think Cheesecake will be one. Don't expect anything spectacular from CAKE in FY2010 -- just flattish to slightly higher same store sales -- and only a slight increase in revenue, with most likely a net zero increase in restaurants operated.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Activision Blizzard Inc. (ATVI) reported better-than-expected Q4 earnings and declared an annual dividend.
• Allstate Corp. (ALL) swung to better-than-expected Q4 earnings and also swung to a full-year profit.
• Buffalo Wild Wings Inc. (BWLD) shares tumbled after it posted disappointing earnings tied to costs.
• The Cheesecake Factory Inc. (CAKE) posted better-than-expected Q4 earnings but sales were flat.
• Chipotle Mexican Grill Inc. (CMG) earnings numbers for Q4 resulted in upgrades from two analysts.
• CVS Caremark Corp. (CVS) higher Q4 earnings matched the expectations of analysts, and shares rose.

I'm going to take a brief look at two quarterly reports from the past week. We've got a popular restaurant chain on the menu, as well as a DVD-rental business that is causing Hollywood a lot of headaches.

The Cheesecake Factory (CAKE) reported flat sales revenue in the fourth quarter. And when I say flat, I mean it: $400.6 million versus $400.4 million. On an adjusted basis, net income was 28 cents per share, representing an increase of 87%. This was four pennies ahead of estimates.

Cheesecake Factory's (CAKE) stock has broken out of a trading range, and that's one major reason I'm reiterating my buy rating for the company's shares, first recommended on June 25, 2009, at a price of $16.30.

The U.S.'s frugal consumer era has hit the restaurant sector hard, and there will be many chain restaurant casualties, but Cheesecake won't be one. Don't expect anything spectacular from CAKE in FY2010 -- flattish to slightly higher same-store sales, and only a slight increase in revenue, with most likely a net zero increase in restaurants operated.

Analyst upgrades:

• Citigroup upgraded Advanced Micro (NYSE: AMD) to Buy from Hold and raised its target to $5.50 from $4.25 citing valuation and expectations for the company's competitive position and gross margins to improve.
• Barclays upgraded American Express (NYSE: AXP) to Overweight from Equal Weight citing long-term earnings growth as the company benefits from declining charge-offs and credit costs. The firm has a $38 target on the stock.
• JPMorgan upgraded Arch Coal (NYSE: ACI) to Overweight from Neutral and raised its target to $22 from $19 citing the FTC approval for the acquisition of Jacobs Ranch mine and valuation.
• Bebe Stores (NASDAQ: BEBE) was upgraded to Overweight from Equal Weight at Stephens.
• Cheesecake Factory (NASDAQ: CAKE) was upgraded to Neutral from Underweight at Piper Jaffray.
• Ashland (NYSE: ASH) was upgraded to Buy from Hold at KeyBanc.

It goes without saying that, in general, I believe one of the worst American inventions has been the restaurant chain. Chains represent a vast wasteland, from a culinary standpoint, along with other shortcomings. The citizens of France wonder how Americans tolerate such horrible dining options. Comment les Américains tolèrent de tels aliments? Moreover, in the U.S.'s 'frugal consumer' era, several chains are destined to close.

But one or two chains represent an exception to the above, and The Cheesecake Factory (NASDAQ: CAKE) is one. Here's why:

Can you believe Cheesecake Factory (NASDAQ: CAKE) traded below $5 last November?

I can. Its model of big meals and big cheesecake appeared vulnerable to the deep recession. Would consumers cut out the fat in their dining budget?

Apparently not, as the stock is up more than 3 times since hitting the bottom.

It's about that time again: Pepsi vs. Coke. No, not another taste test or another Battle of the Brands. It's time for the next quarterly results from these two soft drink titans.

Analysts surveyed by Thomson Reuters anticipate that PepsiCo Inc. (NYSE: PEP), global beverage and snack food giant, will report fourth-quarter earnings this week that are 9.1% higher that a year ago, or $0.88 per share. Revenue is expected to total $12.8 billion, which is 3.9% higher than last year. For the full year, the profit is expected to be $3.67 per share on revenue of $43.4 billion, up from $3.38 per share on $39.5 billion in 2007. PepsiCo's earnings met or beat estimates in four of the past five quarters, but missed by only two cents per share in the third quarter. The consensus recommendation of analysts remains to buy PEP. The share price fell to a 52-week low in January and is now 24.4% lower than it was a year ago. During the fourth quarter, PepsiCo declared a $0.42 per share quarterly dividend, agreed to acquire a Spitz International, and announced investments in China and Mexico.

How should you invest $10,000 in the coming year? The question was posed to some of Wall Street's most respected seers by syndicated columnist Andrew Leckey, whose Successful Investing column appears in over 150 newspapers.

Here, courtesy of The Bull & Bear Financial Report, 9 leading Wall Street experts -- Elaine Garzarelli, Richard Crippps, Sheldon Jacobs, Don Phillips, Richard Yamarone, High Johnson, Mark Johannessen, Curt Weil, and Paul Nolte -- offer their answers to the $10,000 question.

"Amid relentless volatility in 2007, every participant last December produced an increase over the past 12 months. Our pundits for a second consecutive year are spreading their bets because there are so many economic and political wild cards in the coming presidential election year.

A fund affiliated with restaurant super-investor Nelson Peltz has acquired a 14% stake in Cheesecake Factory (NASDAQ: CAKE), sending shares of the dining chain up 10% on Wednesday.

The company said that it "has had a preliminary conversation with Triarc (Pelz's firm) already, and looks forward to continuing that dialogue."

According (subscription required) to the Wall Street Journal, "Mr. Peltz has bought stakes in several other restaurant and food companies, including Wendy's International Inc.(NYSE: WEN) and H.J. Heinz Co (NYSE: HNZ). At those companies, he has pressed directors and executives to sell brands, increase marketing or otherwise change their strategies in an effort to raise their stock prices. Mr. Peltz has said he prefers to work with existing management to effect change, though in the past his involvement has prompted reshuffling of company management and boards."

Cheesecake Factory has struggled to provide investors with strong returns over the past few years, and was scraping a multi-year low before the Petlz announcement sent the stock up.