Cava Stock: This Restaurant Leader Is Breaking Out Past A Buy Point

Cava Stock: This Restaurant Leader Is Breaking Out Past A Buy Point

IPO Stock Of The Week and restaurant leader Cava (CAVA) is trying to break out past its first buy point since July. Cava stock is on Investor’s Business Daily’s IPO Leaders screen.




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Cava is a fast-casual Mediterranean restaurant chain that opened 11 new stores during the third quarter. That takes the total number of restaurants to 290, a 35% year-over-year increase.

On June 15, Cava stock debuted with its initial public offering price of 22 per share, raising $318 million.

In its third-quarter results, reported on Nov. 7, the company reported a surprise profit, earning six cents a share on revenue of $175.6 million. Sales jumped 26% year over year.

Looking To Gain Share

“CAVA’s results in the third quarter clearly demonstrate the strength and portability of our category-defining brand and highly differentiated offering,” Chief Executive Brett Schulman said in the company’s earnings news release.

Schulman added, “We once again delivered strong top-line growth and impressive unit economics while successfully opening new restaurants across the country. We now have 290 restaurants across 24 states and the District of Columbia and in the face of consumer headwinds, we are positioned to gain market share and deliver on our extraordinary, long-term potential.”

Cava stock holds a modest 85 out of a perfect 99 IBD Composite Rating, but its recent gains make it a top stock to watch.

Cava Stock Breaks Out

This week, Cava stock broke out past an abnormally deep cup-with-handle’s 48.69 buy point, according to IBD MarketSmith analysis. The 5% buy area runs up to 51.12. Shares climbed 1% Friday, holding above that entry, which is the stock’s first buy trigger since an IPO-base breakout last July.

The depth of the Cava stock cup base is 50%, making it much deeper than usual. Meanwhile, the relative strength line remains far from its old highs, though it is at its highest level since August. The RS line is an important technical indicator to watch.

IBD’s current stock market outlook shows a 60%-80% exposure recommendation, which means investors should be on the lookout for breakout stocks and stocks rebounding from support levels.

Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top IPO stocks and the stock market.

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