Nvidia (NVDA +3.97%) has been the star of the stock market this year. The artificial intelligence (AI) chip specialist has wowed investors with triple-digit revenue growth and an even faster surge on the bottom line as it drives the generative AI revolution forward.
No other stock in history has added trillions of dollars in market value so fast, and Nvidia even briefly became the most valuable company in the world, topping Apple and Microsoft. Year to date, Nvidia stock has surged 160% -- certainly, an impressive run.
Yet, some stocks have actually beaten the tech powerhouse this year. Keep reading below to see three of them, and whether they can continue to outperform Nvidia.
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1. Cava Group
Cava Group (CAVA 1.51%) is one of the most impressive restaurant stocks to emerge on the market in years, arguably since Chipotle Mexican Grill. The founder of Panera Bread, Ron Shaich, was an early investor and serves as chair of the board, helping to steer the fast-casual chain toward success.
Cava has also adopted a Chipotle-like menu but with Mediterranean food and a similar minimalist industrial store design. The concept is clearly resonating with customers, according to its results. In the second quarter, Cava reported comparable sales growth of 14.4%, driven by a 9.5% jump in traffic, showing that the concept is catching on.
NYSE: CAVA
Key Data Points
Its average unit volumes, meaning the average annual revenue per restaurant, improved to $2.7 billion, approaching Chipotle's at $3.1 billion. Cava's restaurant-level profit margin is similarly impressive at 26.5% in the most recent quarter, which compares to 28.9% at Chipotle.
Cava's bottom-line profits are also jumping as net income tripled in the second quarter to $19.7 million. The chain is still small at 341 locations, which should give it a long runway of growth. After the earnings pop last Friday, Cava stock is now 182% this year.
2. Sweetgreen
Another restaurant chain, Sweetgreen (SG 5.60%), has also been a breakout performer this year as the fast-casual salad chain has surged thanks to strong growth numbers and a low share price at the beginning of the year.
Sweetgreen has taken a more circuitous route to its current level than Cava as the stock went public at the peak of the pandemic bubble and then crashed, along with nearly every other growth stock.
Since then, the salad slinger has reassured investors of its potential, delivering both impressive growth and improving restaurant-level profits. It's also introduced a robotic kitchen assistant it calls Infinite Kitchen, which the company says is accelerating throughput and saving on labor costs.
NYSE: SG
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Revenue at Sweetgreen jumped 21% to $184.6 million in the second quarter, driven by same-store sales growth of 9%. Sweetgreen's average unit volume is at $2.9 billion, similar to Chipotle, and its restaurant-level profit margin improved from 20% to 22%.
The company is the leader in the fast-casual salad space, and it also has a lot of room for growth with just around 225 locations currently. Its Infinite Kitchen technology -- an automated system for preparing food -- adds another way for the company to differentiate itself.
So far this year, Sweetgreen stock has jumped 225%.
3. Carvana
Carvana (CVNA 0.39%) has been one of the biggest surprises in the stock market in recent years. The online used-car dealer was left for dead in 2022 as its once-rapid growth came to a halt and the business was on the brink of bankruptcy.
However, through aggressive cost-cutting and stabilization in the used-car market, Carvana has rebounded, and the stock has continued to surge this year, up 194% year to date.
By sharply reducing its inventory and restructuring its debt, Carvana has been able to deliver positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and generally accepted accounting principles (GAAP) net income.
NYSE: CVNA
Key Data Points
Carvana has also returned to unit sales growth and solid revenue growth with sales up 23% in the second quarter.
The online used-car dealer should also benefit from lower interest rates. They would encourage more demand from car buyers and make it easier for Carvana to refinance its debt and lower its interest expense, which is still a significant cost for the company at more than half of its operating income.
Are Cava, Sweetgreen, and Carvana buys?
All three of these stocks have earned their soaring performances this year with Sweetgreen and Carvana falling more into the turnaround category than Cava.
Of the three of them, Cava looks like the most attractive right now as its execution and results have been nearly perfect since its initial public offering and it seems well-positioned to follow the growth path in the fast-casual sector carved out by Chipotle.
Carvana, on the other hand, seems like the riskiest of the stocks as it still carries a substantial debt load and the cyclicality of the used car market can be brutal, though falling interest rates should be a tailwind for the company.
Finally, Sweetgreen is another attractive growth story as a unique concept in the restaurant industry, and Infinite Kitchen could prove to be a key driver of profitability as the company adds it to more locations.
For investors comparing these stocks to Nvidia, it's important to understand that Nvidia's upside potential is likely rather limited at this point. With Nvidia's market capitalization at more than $3 trillion, even for it to gain 50% from here would mean a market value of greater than $4.5 trillion, and no company has ever reached $4 trillion in market value.
That doesn't mean that it can't be done, but if you're looking for the next five-bagger or 10-bagger stock, you're better off shifting your focus away from Nvidia to a smaller growth stock like Cava, Sweetgreen, or Carvana.
