CEC Entertainment, Inc. is engaged in the family restaurant/entertainment center business. As of 3/00, the Company operated 302 Chuck E. Cheese%s Pizza restaurants and franchisees operated an additional 55. For the 39 weeks ended 10/1/00, revenues rose 15% to $390.7M. Net income applicable to Common rose 28% to $45.8M. Results reflect the opening of additional restaurants, a 3.1% increase in comparable store sales and improved operating margins.

March 13, 2001

CEC Entertainment Inc. owns, operates, and franchises over 350 Chuck E. Cheese restaurants/entertainment centers in 45 states. The stock has performed well over the past year. Shares of CEC hit an all-time high of $42.22 on March 7th, representing a 116% gain from last year’s low of $19.50 hit on 2/24/00. CEC has been consolidating after reaching its all time high just last week, and we believe that the stock could be ready for another breakout. We are also looking for a possible split announcement out of the next BoD meeting, or with its May earnings release. The company has enough shares for a split with 100 million shares authorized and 34.2 million shares issued and the stock is trading above historic split range. CEC announced its last split on 6/24/99 when the stock was trading at $40.38. Going forward, support is the 10-dma at $41.62 with additional support at $40.56, the 20-dma. Resistance is the March 8th intra-day high of $42.50 and then the all-time high of $43.22. A bounce off of $41.62 or a move above $42.50 on midday volume greater than 80,000 shares may be possible entry points. We plan to place stops at $39.50 as downside protection.

Picked on March 6th @ $41.81
Change since picked +0.00
Stop Loss @ $39.50

March 15, 2001

CEC Entertainment sold off on Wednesday along with the rest of the market. Shares of CEC traded to an intra-day low of $40.39 before bouncing back to a close of $40.78 on volume of 87,700 shares. On Thursday, the stock dipped below the 20-dma to close at $40.60 on volume of 108,000 shares. CEC has developed a short-term downward trend on light volume over the past 6 sessions so it may continue to fall. On a positive note, the stock is staying inside of its recent $40-$43 trading range. Hopefully, CEC will be able to rally from here as we are at the lower end of the range. For now, support has moved down to Thursday’s intra-day low of $40.23 with stronger support at the $40 mark, the February 21st intra-day high. Resistance is Thursday’s intra-day high of $40.95 and then Wednesday’s intra-day high of $41.60. Look for entry points on a bounce off of $40.23 or a move above $40.90 on volume greater than 80,000 shares by noon. We are keeping our stops at $39.50 to limit potential losses.

Picked on March 6th @ $41.81
Change since picked –1.21
Stop Loss @ $39.50