Opinions
Josh Brown, CEO, Ritholtz Wealth Management
Sweetgreen
SG-Q
STRONG BUY
Aug 23, 2024
N/A
Stock price when the opinion was issued
food services
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It went public right before Thanksgiving. The stock became way too hot. Circle back now and shares have fallen to an interesting level. Still not a buy, though. It IPO'd at $28, spiked to $56 immediately and closed around $50. This company is dirupting an entire industry (food). Then, Omicron hit and this stock fell to $24, now back to $33. SG has a strong concept run by smart guys. But it has only 130 locations in the U.S, so you're buying future growth, not current performance. Interesting concept, but a lot of things can go wrong as it grows. In the first 9 months this year, they saw 21% same-store sales growth, though coming off a low base. Pre-Covid, they saw 15% SS-sales growth in 2019. These are fantastic numbers. They had positive profit margins pre-Covid, dipped negative in 2020, but now positive again. SG projects ambitious goals. He is torn about this. SG speaks to the modern, ecologically friendly customers, but such food stocks have initially roared then fizzled. How big can a salad chain get in America? This may be popular on the east coast where Wall Street is, but what about middle America? Wait to see how SG does.
food services
BUY
Has been watching this since it went public. Half its labour costs are food assembly--robots, not workers. It's popular in New York, and they will roll out this system across the US. What if they sell this technology to other fast-food companies that suffer labour shortages? It's a robotics play hidden inside a lunchtime salad store. He just bought a small position, though he missed the big run-up. They're on their way to sustained profits.
food services
He wished he had bought alot more. Shares are jumping 7% today after Cava reported a great quarter. Net sales at Cava jumped 35% and same-store sales were 14% vs. expected 7%. He's holding this for long-term.