We recently published an article titled, Jim Cramer is Talking About These 12 Stocks. In this article, we are going to take a look at where CAVA Group, Inc. (NYSE:CAVA) stands against the other stocks that Jim Cramer has talked about.
During September 30’s episode of Mad Money, CNBC’s Jim Cramer delved into the previous three months and the market’s events. He identified some positive developments amidst the turbulence in the market.
Cramer highlighted that Dow inched up 17%, the S&P 500 went up 42% while Nasdaq gained 38% during the months. He remarked, “For once, good news was actually good news and interesting.” He went on to say that miracles still happened in the stock market’s third quarter. He pointed out that July, August, and September yielded remarkable returns, even highlighting the typically troublesome month of September, which saw the broader market rising significantly.
Cramer elaborated on the lead-up to the Federal Reserve’s decision to cut rates by 50 basis points. He characterized the economic landscape as having “no landing at all,” explaining that the economy continued to grow, inflation decreased, and unemployment ticked up. He suggested that the central bank laid the groundwork for a significant rate cut, which was the reason that there was no panic on Wall Street after the cut. The former hedge fund manager also praised Federal Reserve Chair Jerome Powell for achieving the challenging feat of a double rate cut without shocking the markets.
Moving on, Cramer talked about how the market’s breadth expanded as well, with many sectors gaining traction beyond the dominant Magnificent Seven tech stocks. He noted that a variety of industries, including banks, utilities, retail, healthcare, housing, and transportation, enjoyed their moment in the spotlight.
As for the upcoming election, he referenced Michael Cembalest of J.P. Morgan Asset Management, who described it as “the most polarized election in 100 years.” Cramer observed that, despite the political drama surrounding the elections, Wall Street remained largely unfazed, even in response to significant events like Vice President Kamala Harris potentially replacing President Biden on the Democratic ticket and the attempted assassination of former President Donald Trump.
Cramer also highlighted a shift in the housing market, pointing out the first signs of relief from formerly soaring inflation figures. He suggested that an increase in available homes could be the breakthrough needed to address this intractable asset class that has resisted price declines.
In terms of international markets, he noted that the Chinese market staged a rally, even in light of dismal economic news, owing some of this movement to government-ordered buybacks and influxes of capital.
Cramer commented on the ongoing speculation about stagflation, particularly concerning oil prices, reminiscent of the oil crisis in 1973. He addressed the ongoing conflict in the Middle East, mentioning that Saudi Arabia had abandoned its unofficial price target of $100 per barrel in favor of increasing production.
While many believe that oil prices could soar at any moment, Cramer expressed skepticism, suggesting that although a spike could still occur due to geopolitical factors, he thinks those fears may be overstated.
Reflecting on the past nine months, he concluded that despite the potential for stagflation, 2024 has surprisingly turned out to be a great year for the stock market, defying expectations.
Our Methodology
For this article, we compiled a list of 12 stocks that Jim Cramer mentioned during his episode of Mad Money on September 30. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Jim Cramer On CAVA Group, Inc. (NYSE:CAVA): ‘One Of The Great New Concepts’
CAVA Group, Inc. (NYSE:CAVA)
Number of Hedge Fund Holders: 33
According to Cramer, CAVA Group, Inc. (NYSE:CAVA) is “one of the great new concepts that we have seen in this market” and the market seems to echo this sentiment as the stock has gained approximately 300% over the past year.
The company runs a chain of Mediterranean fast-casual restaurants across the United States under the CAVA brand. The restaurant concept focuses on healthful, flavorful food options while also offering a variety of dips, spreads, and dressings available in grocery stores.
With a market capitalization exceeding $13 billion, the company is finding its strong footing as a player in the fast-casual dining space with its blend of convenience and bold culinary experiences.
Since going public in June 2023, CAVA (NYSE:CAVA) has made ambitious plans for growth, setting a target of reaching 1,000 locations by 2032. As of the end of the first quarter following its IPO, the company operated 279 restaurants, and by the second quarter of 2024, that number had increased to 341. The rapid expansion is proof of management’s ambitious strategy of scaling the company’s presence in the market.
In the second quarter, it reported a 9.5% increase in customer traffic. The company opened 18 net new restaurants during this period and its average unit volume reached an impressive $2.7 million, which points to the effectiveness of its business model.
Furthermore, the second-quarter same-store sales surged by over 14%, a sign that existing locations are gaining popularity and drawing in more customers. The company seems to be on a good track and Cramer has recommended to hold on to the stock and buy more if it comes down.
Next Century Growth Investors, LLC stated the following regarding CAVA Group, Inc. (NYSE:CAVA) in its first quarter 2024 investor letter:
“CAVA Group, Inc. (NYSE:CAVA) is a fast casual restaurant chain serving authentic Mediterranean cuisine, featuring customizable bowls and pitas. CAVA currently owns and operates >300 stores, and the company targets a 15% plus new store growth rate. The intermediate goal is to have 1,000 stores by 2032 with plenty of opportunity to grow beyond that level. The company already delivers solid restaurant level margins >20% and they believe 3-5% same store sales growth is achievable over time. As the business matures, they should be able to leverage G&A expense which should lead to strong earnings growth over many years.”
Overall, CAVA ranks 9th on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of CAVA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CAVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.