8 Cheap Restaurant Stocks to Buy According to Hedge Funds

3. The Cheesecake Factory Incorporated (NASDAQ:CAKE)

Forward Price to Earnings Ratio: 13.39

Number of Hedge Fund Holders: 22

The Cheesecake Factory Incorporated (NASDAQ:CAKE) is an American restaurant company, that owns over 330 restaurants in the United States and Canada under the brands The Cheesecake Factory, North Italia, and a collection within Fox Restaurant concepts. The company also has a bakery division, that prepares food items, including cheesecakes, for its restaurants and international licensees.

CAKE’s shares have risen by over 9% since the announcement of financial results for the third quarter of 2024. Total revenue during Q3 stood at $865 million, with comparable sales outperforming the industry, reflecting consistent consumer demand for the brand. EPS was posted at 58 cents, beating estimates of $0.47 per share and growing 49% year-over-year. During the quarter, The Cheesecake Factory Incorporated (NASDAQ:CAKE) returned $14.2 million to shareholders, which included $1.1 million in share repurchases and $13.1 million in dividends.

The Cheesecake Factory Incorporated (NASDAQ:CAKE) has a robust expansion plan in place. It has opened 17 new restaurants this year and is on track to meet its target of opening 22 new restaurants for the full year. CAKE expects to further accelerate its unit growth, with plans to open as many as 24 new restaurants across its portfolio of concepts in fiscal year 2025.

Despite a challenging economic environment, CAKE’s robust financial performance indicates its strong brand recognition and customer loyalty, which it can leverage as it enters new locations and markets. The Cheesecake Factory Incorporated (NASDAQ:CAKE) has a low forward price-to-earnings ratio, which makes it one of the 8 cheap restaurant stocks to buy according to hedge funds. As per Insider Monkey’s database for Q3 2024, 22 hedge funds held a stake in the company.