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No matter how good you are at stock trading or investing, it is inevitable that you will miss some opportunities. On the other hand, part of the magic of investing is the fact that there is always a new opportunity around the corner. For example, if you’re kidding yourself for missing Chipotle, CNBC stock guru Jim Cramer may have found the next one. Keep reading to find out why he loves CAVA restaurant stock.
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CAVA (NYSE: CAVA) offers Mediterranean cuisine in a fast-casual environment reminiscent of Chipotle. Jim Cramer recently rated CAVA #2 on his Top 10 Best Performing Stock Lists. Cramer justified this high valuation by saying, “This casual dining chain aims to be the Mediterranean version of Chipotle. It’s up over 242% this year, including the current 1.5% gain.”
Cramer also mentioned CAVA’s strong Q3 2024 earnings report when he noted, “At one point, sales were up so much more because same-store sales were up 18% and Wall Street was only looking for 12.4% .The best thing about Cava is that it was indeed accessible. Many of you ate there and enjoyed it.” CAVA’s Q3 2024 earnings also showed strong performance in other areas.
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Same-store sales rose nearly 20%, while customer volume grew 13% in the quarter. That drove a 39% increase in revenue to $241.5 million for the quarter. However, it is the future of CAVA that excites Cramer. This chain is in the middle of an expansion plan and has added 11 new locations in the third quarter of 2024, bringing the national total to 352. In the third quarter of 2023, CAVA had 279 locations.
Mediterranean dishes are known for being tasty and healthy, with numerous vegetarian options (e.g. falafel, tabbouleh, hummus, salads). This gives CAVA a broad potential customer base wherever it opens. It’s one of those restaurants that fits into the ‘Goldilocks’ zone because they’re relatively affordable and have something for everyone on the menu.
CAVA’s combination of freshness, value and universal appeal is similar to Chipotle’s, so Cramer and many other analysts are optimistic about the future. Currently, CAVA’s market cap is an estimated $16.59 billion, which is impressive, but far below Chipotle’s. However, Jim Cramer thinks it has the potential to get there.
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Cramer summed up his belief in CAVA by saying, “Who’s to say the $17 billion chain might not eventually find its way to Chipotle’s $80 billion-plus level?” CAVA stock is trading at $145. The current price reflects a huge upside spike from the November 22, 2023 share price of $34.30. This represents an astonishing 323% increase from CAVA’s price as of November 22, 2023. Analysts from Morgan Stanley, Citigroup and Barclays have given CAVA a ‘Buy Now’ rating.
CAVA doesn’t currently pay a dividend, so this isn’t a stock to buy if you’re looking for passive income. Potential risks include over-expansion or a downturn in the economy that could cause diners to eat out less often. If you’ve always regretted missing Chipotle, CAVA might be your next chance to buy some good restaurant stock.
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This article Don’t Worry About Missing Chipotle – Jim Cramer Thinks This Stock (CAVA) Is the Next Big Restaurant Chain originally appeared on Benzinga.com
