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 22, 2001

CEC Entertainment continues to trade in the $40-$42 range despite a generally weak market. On Thursday, shares of CEC fell to an intra-day low of $40.01 before making a recovery late in the day. The stock ended the session at $40.45 on strong volume of 224,000 shares. CEC has dipped back down to its previous downward trend line and it has made two consecutive lower lows coupled with lower highs. On the bright side, daily volume has been increasing over the past three sessions and the stock has not violated the lower end of its trading range. For now, support is Thursday’s intra-day low of $40.01 with additional support at $39.50, the March 1st intra-day low. Resistance is the 20-dma at $41.16 and then Tuesday’s intra-day high of $42.15. Traders may consider starting new plays on a bounce off of $40.01 or a move above $41.16 on volume of at least 80,000 shares by noon. We are keeping our stops at $39.50 as downside protection.

Picked on March 6th @ $41.81
Change since picked –1.36
Stop Loss @ $39.50

March 20, 2001

CEC Entertainment has been consolidating in the $40-$42 range over the past week. On Tuesday, shares of CEC traded to an intra-day high of $42.15 before pulling back to close at its intra-day low of $40.60 on volume of 69,300 shares. Despite Tuesday’s pullback, CEC has broken its short-term downward trend with two consecutive higher highs. Given the dearth of stocks for traders long the market, we are looking for the stock to regain its upward momentum on heavier volume in the near future. In the meantime, support is Monday’s intra-day low of $40.23 with stronger support at the $40 mark, the February 21st intra-day high. Resistance has moved up to Monday’s intra-day high of $42.00 and then the March 8th intra-day high of $42.50. A bounce off of $40.23 or a move above $42.00 on midday volume greater than 80,000 shares may be possible entry points. Our stops remain at $39.50.

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

March 18, 2001

CEC Entertainment started Friday’s session in positive territory after Banc of America initiated coverage of the restaurant industry. CEC was assigned a “buy” rating with a $50 price target. Shares of CEC traded to an intra-day high of $40.81 early in the day. Unfortunately, the stock drifted lower as the market sold off. CEC closed at its intra-day low of $40.40 on volume of 149,900 shares. The stock has made three consecutive lower highs, creating a short-term downward trend. However, CEC still remains within its $40-$43 trading range, so it could bounce after a test of the $40 mark. The stock is currently trading around its previous split range. In addition, the company has 100 million shares authorized and 34.2 million shares issued; plenty for a 3:2. We are looking for a split announcement with the May earnings release or out of its next BoD meeting. Until then, support is holding at Thursday’s intra-day low of $40.23 with additional support at $40, the February 21st intra-day high. Resistance remains at Thursday’s intra-day high of $40.95 and then Wednesday’s intra-day high of $41.60. Traders may consider starting new plays on a bounce off of $40.23 or a move above $40.95 on midday volume of at least 80,000 shares. We are leaving our stops at $39.50 as downside protection.

Picked on March 13th @ $41.81
Change since picked –1.41
Stop Loss @ $39.50