2024 Stock Picks

So CAVA...
I noticed something while I was trying to figure out what they'll do tonight on earnings.
2023 had 53 weeks in it (at least it did in their accounting world)... and their report said they estimated ebitda benefited from the extra week by $2.5M... ok good.

But in their guidance for 2024... they gave an ebitda range of $86M - $92M.

Now I realize they are growing fast, and opening another 50 stores in 2024 will certainly pressure ebitda some, but if one week was good for $2.5M, then 52 weeks would be $130M :wtf:

So $86M-$92M sounds awful low-ball to me. Also forecast comps at 3%-5% sounds low too.

This stock has had quite a run, up over 100% since the ipo... but if same store sales come in around 7%-8% and I'm right about that ebitda, this thing is gonna take out $100 tonight.

If same store sales come in at or below guidance though, watch out below. But I don't think that'll be the case.

To quote Murray Turtle,
%%%%
:caution::caution:Not a recommendation, not FDIC insured%%% :caution::caution:
:cool:

CAVA--->$83.25
 
(Emphasis below mine)*

We estimate that the benefit to fiscal 2023 income from operations and Adjusted EBITDA of the 53rd week was approximately $2.5 million due to higher CAVA Revenue and CAVA Restaurant-Level Profit Margin, partially offset by higher general and administrative expense of approximately $1 million to support the growth of the business.

Fiscal 2024 Outlook:

CAVA Group anticipates the following for fiscal 2024:

Net New CAVA Restaurant Openings 48 to 52

CAVA Same Restaurant Sales Growth 3.0% to 5.0%<------

CAVA Restaurant-Level Profit Margin 22.7% to 23.3%

Adjusted EBITDA $86.0 to $92.0 million <--------

 
Two other things, purely supposition...

Now don't get me wrong, CMG's food is awesome, and a great value imo, but everything gets old after awhile. Now I have never eaten at a CAVA, but if it's as great as everyone says, then I could certainly see them stealing some CMG customers out of a "lets try something new" consumer mindset alone. I assume it's the same demographic and price point as CMG.

The other thing, again a guess on my part, but I bet shorts have been, and certainly are today, hitting this thing pretty hard based on its meteoric performance to date. That climb from $70 to $85 since May 1 has been pretty gradual, no sharp spikes really other than maybe Friday and today, but even those are tame... that tells me this might be setting a bear trap in advance of a huge gap up.

$82.62 as I type.

All eyes are gonna be on those same store sales though. If they come in over 7%... yowsa.
 
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vanzandt said:
... but if same store sales come in around 7%-8% and I'm right about that ebitda, this thing is gonna take out $100 tonight.
More...
Taking out $100 sounds pretty aggressive. That would be a move north of 20%. But if they are opening 50 new stores in 2024, that's a 16% increase over what they already have right there, so a 20% move is not as crazy as it sounds.

Their balance sheet is solid, no debt, and the current float is about 90% of the total shares outstanding which is always good.

All that said... it sure is difficult to buy a stock that is up 100% from it's ipo price less than a year ago. But the numbers seem to be there.

Tough call. Options are pricing a 12% move... maybe wait, if it does sell off I think anything in the mid to high $60's will be bought pretty hard.
 
I don't know why its selling off. The headline says forecast same store comps are 3.5%---that's wrong. ---- the report says 4.5%-6.5%, which is a raise over their February guidance of 3%-5%

I think it's gonna bounce.

$77.17
 
GreatCamel said:
Van

Question, assuming TRUMP wins which sectors you think one should position into?
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Sector-wise it's hard to tell. Tech should remain strong, oil & gas services should do well as a sub-sector. Defense is already jacked up. It might be easier to figure out which ones to short. Or cherry-pick individual stocks. I think Boeing will do well in the absence of any more screw ups.

Back to CAVA here... if it gets thru $78 here in a few minutes, it should keep going.
$77.73
 
vanzandt said:
Back to CAVA here... if it gets thru $78 here in a few minutes, it should keep going.
$77.73
More...

There it goes. This thing should gap up nicely tomorrow. I think that was a classic after-hours low volume dump to shake out the weak hands with the whales gladly scooping up the shares.

It's $80 now.
 
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