Oppenheimer’s Favorite Stocks For Next 12 Months: Top 32 Stock Picks

30. Sweetgreen, Inc. (NYSE:SG)

Share Price Upside: -1%

Number of Hedge Fund Investors In Q2 2024: 27

Average Analyst Share Price Target: $37.2

Sweetgreen, Inc. (NYSE:SG) is a specialty American restaurant chain that focuses primarily on salads and other foods for the health conscious consumer. One distinctive fact about the firm is that it has partnered up with growers to develop a supply chain of vegetables that allows it to control product quality and freshness. This offers Sweetgreen, Inc. (NYSE:SG) a key competitive advantage over potential rivals that might be interested in competing with it since while selling salads might have few barriers to entry, developing a supply chain does. At the same time, the specialty nature of its business means that Sweetgreen, Inc. (NYSE:SG) has to ensure market penetration and carefully map out its stores to ensure that they are operating in areas that are favorable to its products. Its business is also highly cyclical but also benefits from keeping an eye on the future as healthy foods are growing in popularity among millennials and Gen Z. As for Oppenheimer, it believes that Sweetgreen, Inc. (NYSE:SG)’s “fundamentals are improving with new SSS drivers, expanding restaurant margins, and new market unit economics hitting hurdles.”

Meridian Funds mentioned Sweetgreen, Inc. (NYSE:SG) in its Q1 2024 investor letter. Here is what the firm said:

“Sweetgreen, Inc. operates restaurants serving fresh and healthy foods in the United States. The salad-focused restaurant concept has invested heavily to develop a captive network of growers that help ensure the freshness of its produce, a distinct competitive advantage. Additionally, management’s investment in automation technology, known as the “Infinite Kitchen,” has shown strong promise of significant labor cost savings, a reduction of order fulfillment errors, and increased restaurant throughput. While Infinite Kitchen has only been tested in a handful of stores to date, initial data supports the potential for automation technology to significantly improve both margins and average unit volumes. The stock rose in the quarter on accelerating same-store sales growth and better than expected guidance from management. In addition, investors took notice that material margin improvements could quickly reduce Sweetgreen’s cash burn, a prior source of concern. Sweetgreen was a new position for the Fund in the quarter.”