We recently compiled a list of the 12 Best Multibagger Stocks to Buy Right Now.In this article, we are going to take a look at where CAVA Group, Inc. (NYSE:CAVA) stands against the other multibagger stocks.
The US equities continued their upward movement in 2024 and fueled the S&P 500 to record highs. Much of this optimism in the broader market was backed by the strong US economy and the Federal Reserve’s stance to cut interest rates. As per PBS News, 2024 saw several familiar winners, like big technology stocks. These stocks got even bigger due to continuous increases in their stock prices. Apart from certain tech giants, strong momentum was also seen in Bitcoin, gold, and other investments.
Performance of US Equity Markets in 2024- A Recap
Ameriprise Financial reported that 2024 had a strong start, with the S&P 500 Index concluding the Q1 on a high note due to a healthy US economic backdrop, moderating inflation, improvement in profit conditions, and anticipations of rate cuts from the US Fed.
The strong growth momentum continued in Q2 as the S&P 500 Index saw its strongest three-quarter run since mid-2021. Ameriprise Financial highlighted that an AI boom again drove healthy gains throughout IT and communication services. However, increased rates and a pause by the US Fed capped broader market gains. In September, the US Fed reduced its policy rate for the first time since 2020, concluding its aggressive rate-hiking cycle to control inflation. Therefore, it began a new monetary policy stance that supported economic growth and the labor market. Additionally, since the election, investors’ confidence has been further boosted towards risky assets, including equities.
For the S&P 500, J.P. Morgan Research projects a price target of 6,500 next year, with EPS of $270. The US is expected to remain a global growth engine with the expansionary business cycle, healthy labor market, broadening of AI-associated capital spending, and the prospect of strong capital markets and dealmaking activity.
Furthermore, BlackRock sees several factors expected to support stocks in 2025. The decisive election result removed key uncertainty hanging over the broader US market. The rally that was seen after the results might continue into the start of 2025 primarily because of prospects of tax cuts and deregulation throughout key industries. While the impact of some policies remains uncertain, history has a long-term record of positive returns in 1st year of a Presidential term. The firm also believes that earnings and valuations hint at healthy potential for a continued broadening of the market. Its analysis of the S&P 500 data reflects that earnings for Mag 7 stocks outperformed the broader market by 37% in 2023. This earnings gap was narrowed across 2024. Now, it expects it to decline to 7.5% in 2025.
Our Methodology
To list the 12 Best Multibagger Stocks to Buy Right Now, we used a screener to shortlist the stocks that have gained over 100% over the past year and have healthy average upside potential. Finally, the stocks are arranged in ascending order of their average upside potential, as of 30th December 2024. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with 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).
A close-up image of a colorful salad platter with toppings and dressings.
CAVA Group, Inc. (NYSE:CAVA) operates a chain of fast-casual restaurants specializing in Mediterranean cuisine.
Wall Street analysts are drawing parallels between CAVA Group, Inc. (NYSE:CAVA) and Chipotle Mexican Grill, reflecting that the former can potentially replicate Chipotle's remarkable growth trajectory. Both companies operate in the fast-casual segment, providing customizable and health-focused menu options.
CAVA Group, Inc. (NYSE:CAVA)’s Mediterranean-inspired cuisine focuses on growing consumer demand for diverse, flavourful, and nutritious food options. Therefore, this positioning is expected to allow the company to capture a significant market share as it expands nationally, just like Chipotle revolutionized the broader Mexican fast-casual category.
As per analysts, if CAVA Group, Inc. (NYSE:CAVA) maintains its strong unit economics and continues to resonate with its customers throughout different regions, it can become a leading player in the fast-casual restaurant industry. CAVA Group, Inc. (NYSE:CAVA)’s focus on technology integration, like its mobile app and digital ordering platforms, are some of the successful strategies likely to help the company.
Simplifying kitchen processes and leveraging technology for order management can help reduce labor costs and minimize waste. Furthermore, continuous refinement of the menu to focus on high-margin, high-demand items and reducing menu complexity to reduce ingredient costs can help in maintaining healthy unit economics.
Overall CAVA ranks 11th on our list of the best multibagger stocks to buy right now. While we acknowledge the potential of CAVA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.
