Restaurants historically have been

a leading indicator of the economy and the stock market.

In recent years, however, restaurant stocks

have become less synchronized,

reflecting the distinct economics of different segments

and the unique specifics of each company.

Recently, Mediterranean-themed fast-casual restaurant chain Cava (CAVA)

reported Q2 revenue up 20% and earnings above estimates, but

same-restaurant sales rose only 2.1% year-over-year, less than the expected 6.2%. 

That small gap caused the stock to drop 15%.

CAVA has now fallen 61% from $172 in November

2024 to $66, as growth expectations have declined.

Similarly, salad-focused fast-casual chain Sweetgreen (SG)

reported its Q2 same-restaurant sales down 7.6% year-over-year.

Its stock has plummeted 80%, from $45 to $9 since November 2024.

Even restaurant powerhouse Chipotle (CMG) saw its

Q2 same-restaurant sales decline 4% year-over-year.

Its stock has fallen 35%, from $66 in December 2024 to $43.

Looking back, we highlighted both CAVA and SG

as significantly overvalued candidates to consider selling;

here are two examples:

– Our November 10, 2024 issue said:

             “CAVA’s valuation is insanely high

at 20x Price/Sales and 300x Price/Earnings,

and the company’s $16.8 Billion market cap

values each CAVA restaurant at an extremely high $50 million!”

– Our December 1, 2024 issue said:

“SG’s valuation continues to be quite high

at a $4.7 Billion market cap

with 7.0 Price/Sales valuation

and no earnings yet.”

Subscribers could have used our highlighted information

to make profits and avoid losses in 3 ways:

Selling Existing Long Positions.  Anyone who was long CAVA or SG

could have sold at those high prices, captured gains,

and avoided the price declines and losses that followed.

Selling Short.  Anyone so inclined could have sold those stocks short

at those high prices and captured short sale gains

by buying to cover the shorts at lower prices for sizeable profits.

Avoiding Buying.  Anyone not long, or not interested in selling short,

could have simply ignored the Wall Street hype and not bought those stocks,

thus avoiding the large losses that many others suffered.

This is yet another lesson to avoid the most common investor mistake

of buying highly valued stocks and paying too high a price.

* * *

The information herein is provided solely to inform

and is not intended as, and is not to be construed as,

investment advice or as an investment recommendation. 

Readers are advised to make their own investment decisions

and accept all responsibility thereof.

There is always risk of loss in publicly-traded stock trading & investing.

 Past performance is not necessarily indicative of future results.

See our record at https://billionairestocktrader.com/our-record/

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