Shake Shack Inc. (SHAK): Among the High Growth Restaurant Stocks for 2025

We recently compiled a list of the 10 High Growth Restaurant Stocks For 2025. In this article, we are going to take a look at where Shake Shack Inc. (NYSE:SHAK) stands against the other high growth restaurant stocks.

Morgan Stanley recently published a report on the restaurant industry, suggesting that the tough environment that the industry is currently facing may ease out in 2025, though only modestly. Restaurants will have to continue working on providing value meals to consumers who continue to struggle to balance their income and expenses.

A balanced job market could help keep labor costs steady. However, a political campaign against immigration could be a potential headwind for the industry. A growing emphasis on robotics to improve efficiency and customer service could also play a key role in the industry’s development this year, though it is too early to determine the financial implications of these moves.

We decided to shortlist a few stocks that we believe could benefit from an improving industry environment in 2025. To come up with the list of 10 restaurant stocks with a high growth rate, we only considered stocks that have grown by more than 15% in the last 5 years or since IPO and have a market cap of at least $1 billion.

A cook in a busy kitchen preparing a delicious cooking of burgers and fries.

Shake Shack Inc. (NYSE:SHAK)

Shake Shack Inc. is a modern-day burger stand that runs, franchises and owns a restaurant chain. It serves hot dogs, hamburgers, shakes, chicken, and other products. The company’s stock price appreciation at a CAGR of 12% does not do justice to a sales growth rate of 18% over the past 5 years. The stock is currently trading at the same levels it was 4 years ago, which is why we believe it is undervalued.

The reason for the lack of performance is the company’s future growth. Markets are forward-looking and despite an impressive 5-year record, the company isn’t that optimistic about the upcoming 3 years. The company itself projects revenue growth of low teens over the course of 2025, 2026, and 2027. Having said that, it continues to perform well at a fundamental level even if it can’t sustain its growth rate. For an investment like this, any growth catalyst often results in a re-rating, bringing handsome price appreciation with it.

Overall SHAK ranks 8th on our list of the high growth restaurant stocks for 2025. While we acknowledge the potential of SHAK as an investment, our conviction lies in the belief that some 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 SHAK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

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