4 Reasons to Buy Cava Stock Like There's No Tomorrow

Cava Group (NYSE: CAVA) isn't exactly a household name -- yet. Most consumers have probably never even heard of it, let alone eaten at one of its 323 restaurants spread across 25 states. Indeed, the most likely reason you're reading this right now is simply because the company's been getting lots of added attention since going public in June 2023, sending the stock much higher in the meantime.

If you're looking for a new growth investment, Cava stock remains a compelling option despite the added hype this past year. Four reasons stand out for this assessment.

But first: What is Cava?

For the unfamiliar, Cava is a restaurant chain featuring fast-casual Mediterranean cuisine. It operates in the space between fast food and traditional "sit-down" service, offering a scaled-down menu that features fresh ingredients combined into easy-to-make/easy-to-eat meals at a price that won't break the bank. The company opened its first store in 2010 and has grown relatively quickly to 323 locales as of April. Apparently, consumers love this fast-casual alternative to burgers and burritos.

There are four very specific reasons investors might want to nibble on Cava stock sooner rather than later.

1. Cava is growing like crazy

The growth in the number of restaurants Cava continues opening is telling. But this isn't just expansion for the sake of enlarging a physical footprint. More restaurants means more revenue at the same time each locale is growing its base of paying customers.

The company's fiscal Q1 revenue improved 30.3% year over year, largely thanks to the 14 stores opened during the quarter in question. But it was also boosted by modest same-store sales growth. This progress extends a well-established growth streak that extends back for several years.

2. Cava is already profitable

While growth is expected of all young companies, Cava is still unique compared to similarly sized peers and other, similarly aged start-ups. It's profitable right now.

It's not wildly profitable, mind you. Of the first quarter's revenue of $259 million, only $14 million (or 5.4%) of it was turned into net income. That's not a lot.

It's a lot for a young company in this particular industry, however, and encouraging if only because its ever-widening profit margins confirm this enterprise can be self-sustaining.

3. Cava isn't racking up debt either

Profits aren't the only distinguishing factor here, however. Cava is also different from almost any other player of its ilk by virtue of remaining debt-free. As of April, the company only owed $122,000 in long-term obligations versus $329,000 in cash or cash equivalents. It's also only got $111,000 in near-term debt.

Don't misread the message: Cava is raising money in ways that technically disadvantage shareholders. Namely, it's issuing stock to come up with cash. There are now nearly 118 million outstanding shares of Cava stock, well up from the less than 17 million sold via its initial public offering in June of last year. Look for more stock issuance in the foreseeable future as well, as the company funds its growth efforts.

On balance, however, this is arguably the better option for current shareholders with stakes that are being diluted. The pros outweigh the cons, if only by virtue of keeping Cava fiscally flexible.

4. Cava stock is currently trading down

Last but not least, interested investors might want to go ahead and buy Cava stock like there's no tomorrow, just because shares are trading down 13% from their recent all-time high.

CAVA data by YCharts

No, that's not a lot. That may be all the discount you're going to see anytime soon from this ticker, however. That's roughly the same size as April's pullback, which ultimately gave way to the rally carrying shares to their recently reached record .

Just keep it in perspective

Don't get short-sighted: While the bullish case for Cava Group is sound, there's also no denying this is still a young company that will be tested. It may even fail some of these tests; it just comes with the territory. That's going to keep this stock's volatility ramped up to levels that might prove uncomfortable.

For investors that can stomach the risk and volatility, though, this restaurant name could easily be at home in the growth portion of your portfolio. The whole Mediterranean concept is clearly clicking with consumers in a way that isn't often seen within the restaurant business.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Cava Group. The Motley Fool has a disclosure policy .