We recently compiled a list of the Jim Cramer’s Best Performers List: Top 10 Stocks.In this article, we are going to take a look at where CAVA Group, Inc. (NYSE:CAVA) stands against the other stocks on Jim Cramer’s list of best performers list.
On Wednesday’s Mad Money episode, Jim Cramer took a deep dive into ten stocks, each worth over $1 billion, that have seen significant growth this year. While acknowledging that many of these stocks are speculative, he emphasized that they still hold potential as smart investments.
Cramer suggested that when looking back on this year, two trends will stand out: a steady rise in the S&P 500, and a series of moves that initially seemed almost magical, but were grounded in reality.
Cramer also reflected on the common investment approach of sticking with index funds, noting that it is a popular strategy because it requires minimal effort. But, according to him, simply parking your money in an index fund might not be the best way to maximize returns. Instead, he argued that investors should consider individual stocks with unique characteristics, many of which are speculative since they offer opportunities for much larger gains.
Cramer criticized the tendency among experts to dismiss individual stock investments beyond index funds, saying:
“Far too often we become snobs when we talk stocks. So many experts think that if you venture past the index, you could fall off some sort of intellectual cliff. It makes any gains null and void. It’s as if the huge swath of points you could have gained simply don’t count. But that, people, is nonsense.”
During Wednesday’s episode, Cramer highlighted several stocks that have surged by over 200% this year, choosing to focus only on those with a market cap of more than $1 billion. He did clarify, however, that he was not endorsing these stocks, especially given how much they have already appreciated. Instead, his point was that speculative stocks, despite their volatility, have a valid place in an investment portfolio.
While they come with risks, a small stake in one of these stocks could outperform a much larger investment in an index fund. For Cramer, it is not about avoiding speculative stocks altogether, but recognizing their potential when balanced alongside more stable investments like index funds.
Cramer wrapped up by stressing the importance of considering these high-flying, speculative stocks and said:
“The bottom line: Let’s remember this list of frothy stocks and think of them the next time you’re about to ignore a stock for being too speculative because these names are often the epitome of speculating wisely, which can be the key for terrific long-term performance, of course, only when melded with index funds.”
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 13 and listed the stocks in the order that Cramer mentioned them.
Why are we interested in 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.
On Wednesday, Cramer discussed CAVA Group, Inc. (NYSE:CAVA) being accessible and its recently released third-quarter earnings report.
“The second smallest gainer in this group of just hallowed stocks is the most salient and that’s Cava Group, which reported last night. This casual dining chain aspires to be the Mediterranean version of Chipotle. It’s up over 242% for the year, including today’s 1.5% gain. At one point, it was up so much more because the same-store sales were up 18% and Wall Street was only looking for 12.4%. The best thing about Cava is this one was indeed accessible. Many of you have eaten there and enjoyed it.
CAVA Group (NYSE:CAVA) is a leading player in the fast-casual dining sector, operating a growing network of Mediterranean-inspired restaurants across the United States. The company has made significant strides in expanding its footprint, as evidenced by its impressive financial performance for the third quarter. During the quarter, its same-store sales surged by 18%, driven largely by a nearly 13% increase in customer traffic. This growth contributed to a 39% rise in total revenue, which reached $241.5 million for the quarter.
The success at the unit level is also noteworthy, with average unit volumes improving from $2.6 million to $2.8 million, reflecting a rise in the amount of business individual restaurants are generating. At the same time, the restaurant-level profit margin stood at 25.6%. The company saw a substantial increase in net income, which nearly tripled from $6.8 million to $18 million. Diluted EPS also saw a significant jump, rising from $0.06 to $0.15.
CAVA Group’s (NYSE:CAVA) expansion strategy continues to gain momentum, with CEO Brett Schulman emphasizing the company’s growth in both new and existing markets. During the earnings call, Schulman mentioned that the company added 11 new locations in Q3, marking a continuation of its nationwide expansion.
Overall CAVA ranks 2nd on Jim Cramer’s list of the best performing stocks. While we acknowledge the potential of 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 more promising than CAVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
