12 Best New Stocks to Buy According to Hedge Funds

9) CAVA Group, Inc. (NYSE:CAVA)

Number of Hedge Fund Holders: 32

CAVA Group, Inc. (NYSE:CAVA), which made its public debut on NYSE on 15^th June 2023, owns and operates a chain of restaurants under the CAVA brand in the US.

Wall Street analysts are optimistic about CAVA Group, Inc. (NYSE:CAVA)’s expansion strategy. Furthermore, analysts have pointed out potential catalysts for future growth including the continued expansion of the restaurant network, further menu innovations, enhancements to digital ordering experience, and potential international expansion opportunities. CAVA Group, Inc. (NYSE:CAVA)’s expansion strategy emphasizes increasing its geographic footprint and enhancing its existing store performance.

As per industry experts, CAVA Group, Inc. (NYSE:CAVA)’s plan to open new units across various markets offers a clear path for revenue growth. By carefully choosing new locations and optimizing its store format, CAVA Group, Inc. (NYSE:CAVA) can tap into underserved markets and capture a larger share of the fast-casual dining segment.

CAVA Group, Inc. (NYSE:CAVA)’s focus on digital ordering and delivery services also places it well to adapt to dynamic consumer preferences and expand customer base beyond traditional dine-in patrons. As CAVA Group, Inc. (NYSE:CAVA) scales, it can benefit from economies of scale in supply chain management and marketing efficiencies, potentially resulting in margin expansion and improved profitability.

Next Century Growth Investors, LLC sees a material upside to CAVA Group, Inc. (NYSE:CAVA)’s stock on the back of new store growth rate and same-store sales growth. Here’s what the firm said in its Q1 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.”