Cheesecake (CAKE) in a pickle

Actually, Cheesecake (CAKE) isn't in a pickle so much as I am in a pickle about CAKE. Sentiment among the analyst set has been divided (good article on Seeking Alpha describing the changes in the last month http://seekingalpha.com/article/132847-cheesecake-factory-why-the-moving-price-target) about the stock, but the stock's price action has been one way in the last month or so (up from a low of $6.84 on March 9th to a high of $18.11 on Friday). After having sat on this one for more than 3 years (enduring a significant deterioration in the firm's performance) I decided it was time to exit after such a big move. Here is my pickle. When I looked at the earnings power of the company, it pretty much struggled to produce much more than $1 in EPS even in its best times over the last five years (as such if I normalize long term earnings power around $1 and give it a normalized multiple of 15, that equates to a $15 target price...they're expecting EPS of $0.64 in 2009 and $0.74 in 2010...those numbers will obviously go up). Add to that the fact that they are only adding one more restaurant this year, the Discretionary sector has been on an absolute tear in the SMID cap space this year, and all of this in the face of rising unemployment, and I am somewhaat sanguine about the company's prospects over the next year. That having been said, the stock is trading at a reasonable discount on a P/Sales basis to its better peers (YUM) and I believe its new menus (lower portions = lower costs) along with the chance for a resumption to adding new restaurants at some point in the future (obviously not at the same rate as in the past, but still), point to a return to growth and an improvement in operating margins. All of which could lead to a re-rating of the stock on a P/Sales basis, and a price somewhere in the range of $25-$30 over the next 3-5 years. Obviously a lot needs to go right for that to happen (and a lot has already been factored in just recently...just as a lot of bad things were factored in on the way down), but that is the pickle I am in. And that pickle is something called regret, and regret is something that weighs heavily on most investors psychological disposition.

P.S. From Wikipedia. Regret (often also called opportunity loss) is defined as the difference between one's actual payoff and the payoff in a better position that he could have got if a different course of action had been chosen.

P.P.S. I also didn't like the increase in the firm's financial risk as it levered up to buyback stock over the past three years (although it appears they have gone back to managing this business more conservatively by paying back some debt and making their expense structure more competitive...it is amazing what can happen when you get rid of the investment bankers).

Disclaimer: No position in this stock personally or professionally.