Why Cava Stock Jumped 20% in January

Cava Group (NYSE: CAVA) stock jumped 20% in January, according to data from S&P Global Market Intelligence. There was no news specific to the company, but investors have been enthusiastic about the economy and the markets since Donald Trump took office two weeks ago. Cava stock had also dipped in December, and investors may have spotted an opportunity.

Cava looks like a no-brainer business that's going to excel over the long term. It operates a chain of fast-casual restaurants with a Mediterranean spin, featuring a limited number of healthy, premium ingredients that can easily create several custom dishes. Where have I heard that concept before? Oh, yeah, it's a rerun of the Chipotle Mexican Grill concept, with falafel instead of burritos. But Cava is just getting started, with just over 350 stores, in comparison with Chipotle's more than 3,500 stores. Management sees the opportunity for about 1,000 stores by 2032. Considering how well Chipotle has done, and what they perceive as Cava's opportunity, investors are hungry for some Cava today.

There are strong reasons for that confidence. Cava has been demonstrating robust performance, and the future looks as bright as a Mediterranean sun. In the 2024 third quarter, sales were up 39%, driven by new stores and same-store sales growth. Same-store sales increased 18% year over year, which is a phenomenal showing in the restaurant industry today. Restaurant-level profit margin moved up from 25.1% to 25.6%. It was an excellent quarter, and management revised its guidance higher after the report.

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Source Fool.com