By Michael Cintolo, Vice President of Investments, Cabot Wealth Network
Cheesecake Factory (CAKE)
Cheesecake Factory has quietly graduated from “reliable mall anchor” to genuine growth story, and the Q2 earnings report released in late July made that case loud and clear. Total revenue crossed $1 billion in a single quarter for the first time in the company’s history—$1.03 billion, up 8% from a year ago, the second straight quarter of sales acceleration—with the flagship Cheesecake Factory banner posting 5.8% same-store sales growth, driven by actual traffic (up 2.7%) rather than just price hikes on the menu. Impressively, restaurant-level margin hit 20%, the best mark in a decade, as labor productivity and food-cost efficiency finally caught up with the top-line momentum; EBITDA followed at a record $118 million, up 18% year over year, while earnings jumped 24% to $1.44. More importantly, the growth isn’t just the core brand carrying the load anymore—the firm’s North Italia outlets rang up $98.4 million (up 8%), and Flower Child, the fast-casual concept picked up in the Fox Restaurant Concepts deal (41 locations in the U.S., serving healthy bowls and salads), grew sales 18% to $56.6 million, with external bakery sales chipping in another $15.4 million. The end result is that what was a single-concept operator a few years ago now has three growth engines running at once, with a modest cookie-cutter growth story here, too; management reaffirmed plans for up to 26 new openings this year (compared to around 410 locations now across all of the company’s brands). Layered on top is a freshly launched loyalty app that’s reportedly exceeding expectations on member sign-ups and engagement, which should help lock in the traffic gains rather than let them fade once the tourism-driven surge cools. A nice 1.3% dividend yield puts a cherry on top of a solid fundamental story, and the stock, while near-term stretched, looks very intriguing: Shares broke out from a huge range in early June and are strong now despite a tricky environment. Wobbles are possible, but we think CAKE is in the early stages of what should be a lasting run.
Enova International (ENVA)
A lesser-known corollary of the AI boom is how that technology, combined with advanced analytics, is being used in the financial technology (fintech) sector to price risk faster and more accurately than before, in turn allowing for higher loan approval volumes and revenue expansion (without greatly increasing risk) among fintechs. Enova, a leader in this space, uses machine learning and advanced analytics to provide online loans and financing to consumers and small businesses, with its primary focus on customers underserved by traditional banks by way of its key offerings, the CashNetUSA and OnDeck online lending platforms. While Enova maintains its subprime consumer credit business, investors are rewarding the firm for its increasing emphasis on small-business lending—its small-and-mid-sized business (SMB) originations have been growing rapidly, with these loans now representing most of the firm’s overall portfolio. (Significantly, the SMB market provides the company with access to a larger addressable market compared to consumer subprime and underserved lending, with less political sensitivity and greater high-quality growth potential.) Mainly as a result of this growing focus, Enova’s originations grew by a healthy 33% year-on-year in Q1, to nearly $2.3 billion, which enabled portfolio growth of 28%, to $5.3 billion, with small business products representing 70% of the portfolio and consumer products accounting for 30%. Total revenue of $875 million increased 17%, while earnings of $3.87 beat estimates by 19 cents (reasons for the stock’s recent strength). Other credit performance metrics were equally strong, with a net charge-off ratio of 7.6% that was down a full percentage point from a year ago; similarly, the net revenue margin (revenue after expected and actual credit losses) turned up, too. As important as anything is the firm’s coming acquisition of Grasshopper Bank later this year, an integration that management sees providing “significant synergies,” providing a national bank charter, lower funding costs (with $3 billion of deposits) and an immediate boost to earnings. Q2 results were outstanding, with revenues up 22% (growth has accelerated the past two quarters) and earnings up 33% and topping estimates; Wall Street now sees earnings up 34% this year and 24% next. The stock broke out nicely in May and remains strong, with a recent brief dip being bought up after earnings.
Garmin (GRMN)
Garmin has always been known as a “GPS company,” but that’s an outdated way to describe what’s become a diversified hardware outfit spanning fitness, outdoors, aviation, marine and auto applications—and the late-July quarterly report showed every single segment pulling its weight at once. Revenue hit a record $2.02 billion, up 11% year over year and comfortably ahead of Wall Street estimates, while earnings catapulted to $2.81 per share (up 29%), blowing past the $2.29 consensus by more than 20%. Fitness remains the growth engine these days (now 37% of the revenue mix), surging 25% on resilient and strong smartwatch demand, but the real story is that Marine grew 14%, Aviation 8%, and even long-struggling Auto end market flipped from a loss to a small profit—only Outdoor dipped, and by just 2%. Margins expanded across the board, too, with operating margins catapulting to over 30%, with the metric itself also lifting by 30% from the year before. (Management hiked its outlook to around $10 per share of earnings this year.) Beyond the here and now is a steady stream of new product cycles (fresh Forerunner watches, an inReach-equipped aviator smartwatch, new marine radios) and the recently closed acquisitions of TrainingPeaks and TrainHeroic, which extend Garmin’s reach into the training platform (getting them into the software layer that powers its hardware)—analysts like the expanded move into the strong fitness category, which should keep earnings growing nicely (Wall Street sees 10%-ish earnings growth, but Garmin has been crushing estimates each quarter). As for the stock, GRMN made no net progress from early 2025 until mid-July of this year, but the bullish earnings reaction bodes well for the weeks and months ahead.
Snowflake (SNOW)
Enterprise data has always needed somewhere to live, and Snowflake built its business on being the trusted place for it—a cloud data warehouse that lets companies pool their information in one spot and query it without wrestling with managing and owning the underlying infrastructure. That’s driven solid growth for years, but as the world has moved from Big Data to AI, though, that same trusted foundation has become even more lucrative—the place where enterprises are starting to manage their AI agents, not just their spreadsheets. Indeed, the big idea here is that with tools like Cortex Code (a coding agent that knows all of a client’s Snowflake data and understands how they fit together) and Snowflake Intelligence (allows users to build and interact with AI agents), the firm’s upside is that it’s becoming a control panel of sorts (in management’s words) for agentic AI to many of the biggest companies in the world—the layer that governs which AI agents can touch which data, keeps them from running amok and lets a company actually trust what those agents are doing (accounts using Snowflake Intelligence more than doubled in a single quarter, and Cortex Code is already live across thousands of accounts). And given that Snowflake has always had a consumption revenue model (not subscription-based), the shift means more work is happening on the platform (as opposed to just data mining), which is causing already-strong results to accelerate. Work that happens on the platform tends to consume more of it over time. In Q1 (ending January), product revenue hit $1.33 billion, up 34% and the strongest sequential dollar growth in company history, with same-customer revenue growth north of 25% as existing customers are consuming meaningfully more as agentic AI takes off. (The number of clients spending at least $1 million on the firm’s platform lifted 29%.) Even better was that remaining performance obligations (basically the firm’s backlog) grew faster than revenue (up 38%) as clients inked deals for higher consumption, another sign of acceleration ahead. Buoyed by all that, management raised full-year revenue growth targets by a good amount (from 27% to 31%) while also nudging margin targets a bit higher, with a lot more of that likely coming as usage expands. There is competition (for both its core offering and now AI products), and that’s a big reason investor perception here has never really taken off in recent years. But Snowflake has always been the leader, and it looks like the AI agent movement should keep the growth story going (or accelerate it). SNOW has had some big ups and downs over the past couple of years, but without much progress—but shares went wild after the Q1 report in May and have traded calmly and properly during the past few weeks. If growth stocks can get moving, we think this stock can do very well.
Wabtec (WAB)
International rail shipping demand is showing remarkable resilience despite macro headwinds and supply chain bottlenecks, creating a tailwind for rail companies. But even more than that, the world’s thirst for commodities like iron ore, copper, lithium and metallurgical coal has put a strain on railroad operators, who need new locomotives and related services. Enter Westinghouse Air Brake Technologies, better known as Wabtec, which is one of the world’s leading rail technology companies. It manufactures products for locomotives, freight cars and passenger transit vehicles, while also building new locomotives with up to 6,000 horsepower (its 2019 acquisition of GE Technologies made it one of the world’s largest freight train manufacturers). Even today, rail remains the lowest-cost way to transport bulk freight—particularly for longer distances where rail is generally much cheaper than trucking—while emitting fewer pollutants, making it attractive for both economic, environmental and regulatory reasons. And despite geopolitical tensions and trade disputes, global trade volumes remain strong in 2026, with growth visible in exports ranging from agricultural and energy products to minerals to manufactured goods, supporting higher freight rail volumes once those products reach the shore. Beyond this, Wabtec is also seeing growth from its tech and data offerings, which are designed to turn locomotives and rail networks into connected, data-driven systems. The firm is positioning itself in some higher-margin categories by providing software, sensors, analytics and automation tools that help rail operators reduce costs and improve efficiency. (Wabtec’s digital Trip Optimizer is one of its flagship automation offerings, designed to lower fuel consumption and reduce equipment wear by using GPS data, track topography and weather information, while also managing automatic braking and acceleration.) In its just-released Q2 results, Wabtec’s revenue of $3.2 billion increased 17% from a year ago (the fastest growth rate since Q3 2023), while earnings of $2.76 beat estimates by 15 cents. Perhaps more important is the strong multi-year backlog of $31 billion (up 42%), prompting management to raise 2026 earnings and revenue guidance. Wall Street sees earnings up 21% this year and 14% next, which is likely conservative. Indeed, the stock had a nice run into February before chopping around for a few months—but the Q2 report kicked the stock to new highs on big volume, likely kicking off a steady, sustained advance.
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About Cabot Wealth Network
This report is published by Cabot Wealth Network which was founded in 1970 by Carlton Lutts, a disciplined investor with an engineering mind who developed a proprietary stock picking system using technical and fundamental analyses.
Since then Cabot Wealth Network, headquartered in Salem, Massachusetts, has grown to become one of the largest and most-trusted independent investment advisory publishers in the country, serving hundreds of thousands of investors across North America and around the world.
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