Do You Believe in the Upside Potential of CAVA Group (CAVA)?

ClearBridge Investments, an investment management company, released its “ClearBridge Growth Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. First quarter of 2025 witnessed sharp equities sell off due to the shift out of mega caps. There was a relative outperformance of mid cap growth stocks over large and small cap growth during the first quarter correction, which indicates the broadening of market, that presents attractive opportunities for high active share managers. In the quarter, the ClearBridge Growth Strategy marginally underperformed its Russell Midcap Growth Index benchmark. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first quarter 2025 investor letter, ClearBridge Growth Strategy emphasized stocks such as CAVA Group, Inc. (NYSE:CAVA). CAVA Group, Inc. (NYSE:CAVA) is a US-based restaurant chain under the CAVA brand. The one-month return of CAVA Group, Inc. (NYSE:CAVA) was 14.57%, and its shares gained 39.25% of their value over the last 52 weeks. On April 10, 2025, CAVA Group, Inc. (NYSE:CAVA) stock closed at $88.77 per share with a market capitalization of $10.261 billion.

ClearBridge Growth Strategy stated the following regarding CAVA Group, Inc. (NYSE:CAVA) in its Q1 2025 investor letter:

“Volatility also created entry points to motivate our first purchase in the utility sector, Vistra, as well as reduce our underweight to the consumer discretionary sector with the addition of CAVA Group, Inc. (NYSE:CAVA). CAVA is a domestic fast casual restaurant chain focused on Mediterranean-inspired cuisine. Its unit economics and strong same-store sales growth are reminiscent of Chipotle when it was of similar size. We believe the company is still in the early stages of achieving its unit growth potential and see opportunity for continued same store sales growth as brand awareness rises and new stores ramp productivity.”

CAVA Group, Inc. (NYSE:CAVA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held CAVA Group, Inc. (NYSE:CAVA) at the end of the fourth quarter compared to 32 in the third quarter. While we acknowledge the potential of CAVA Group, Inc. (NYSE: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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We covered CAVA Group, Inc. (NYSE:CAVA) in another article, where we shared the list of best IPO stocks to buy in 2025. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.