Is Cava Stock a Buy Now?

When Cava Group (NYSE: CAVA) came public in June 2023, it traded at a price-to-sales ratio well above that of much larger peer Chipotle Mexican Grill (NYSE: CMG). Although that situation has since reversed, thanks largely to Cava's stock declining, investors looking at the relatively young company should still tread with caution.

When a company holds an initial public offering (IPO), the goal is to get investors excited so it can sell as much stock as possible at as high a price as possible. There's nothing nefarious in that; it is what the company should be doing as it looks to raise cash to grow its business.

But there are things that investors need to watch out for when Wall Street hypes a new stock. For example, when Cava reported its first quarterly earnings as a public company, it noted that its store count had increased a massive 43% year over year.

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Source Fool.com