In the wake of rallying to new, long-term highs – 52-week highs in one instance – restaurant stocks are among those that have begun to experience potentially significant profit-taking.
Shares of Darden Restaurants (NYSE: DRI) have closed lower for three days in a row after pulling back by more than 1% in Friday’s session. The selling in the stock comes after a four-day rally in DRI that took the stock its highest levels since the summer of 2011.
Darden has only been trading above its 200-day moving average since the beginning of the month, making the stock’s current retreat its first since returning to bull market territory. Now technically oversold, Darden Restaurants has earned “consider buying” ratings of 8 out of 10 as of midday on Friday, and a positive edge, in the short-term of more than one percent.
With a positive edge of more than 1%, shares of Brinker International (NYSE: EAT) have traded lower for four days in a row as of end of day on Friday, when stocks sold off by more than 1%. The stock has finished in oversold territory for the past two consecutive sessions, and is trading at new, short-term lows.
EAT has short-term ratings of 7 out of 10, which puts the stock in our “neutral” category. Additional selling in EAT early next week could easily give Brinker International the boost it needs to reach “consider buying” status, one-point higher.
Down more than 1% ahead of trading on Monday, shares of Cheesecake Factory Inc. (NASDAQ: CAKE) were trading at new, 6-month highs as recently as last week. Profit-taking in the wake of those new highs has helped create short-term oversold conditions in the stock in recent days, with CAKE on Friday finishing just inside of technically oversold territory.
That said, shares of Cheesecake Factory has the largest, short-term edge of any of the restaurant stocks in today’s report, with a positive edge of more than one and a quarter percent, and “consider buying” ratings of 8 out of 10.
Be sure to read our latest from 7 Stocks You Need to Know: “Buying the Selling in Weight Watchers”.
David Penn is Editor in Chief of TradingMarkets.com