These 3 stocks are outperforming Nvidia this year. Is shopping better than the AI ​​leader?

Nvidia (NVDA 1.46%) was the star of the scholarship this year. The artificial intelligence (AI) chip specialist wowed investors with triple-digit revenue growth and even faster bottom line growth as it leads the generative AI revolution.

No other stock in history has added trillions of dollars in market value so quickly, and Nvidia even briefly became the world’s most valuable company, surpassing Apple and Microsoft. Nvidia stock is up 160% year to date — an impressive run to be sure.

However, some stocks have actually beaten the power of technology this year. Read on below to see three of them and if they can continue to outperform Nvidia.

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1. Cava Group

Cava Group (COFFEE -6.12%) is one of the most impressive restaurant stocks to hit the market in recent years, perhaps since Chipotle Mexican Grill. Panera Bread founder Ron Shaich was an early investor and serves as chairman of the board, helping steer the fast-casual chain to success.

Cava has also adopted a Chipotle-like menu but with Mediterranean food and a similar minimalist industrial shop design. The concept clearly resonates 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.

Average unit volume, or average annual revenue per restaurant, improved to $2.7 billion, closing in on Chipotle’s $3.1 billion. Cava’s restaurant-level profit margin is just as impressive, at 26.5% in the most recent quarter, compared to Chipotle’s 28.9%.

Cava’s bottom line profits are also up 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 for growth. After earnings came out last Friday, Cava shares are now up 182% this year.

2. Sweetgreen

Another restaurant chain, Sweetgreen (SG -0.35%)has also been a standout performer this year, as the fast-casual salad chain has soared thanks to strong growth numbers and a low stock price earlier in the year.

Sweetgreen took a more circuitous path 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-wide profits. It also introduced a robotic kitchen assistant it calls Infinite Kitchen, which the company says speeds up production and saves on labor costs.

Sweetgreen’s revenue rose 21% to $184.6 million in the second quarter, thanks to same-store sales growth of 9%. Sweetgreen’s average unit volume is $2.9 billion, similar to Chipotle, and its restaurant-wide profit margin improved from 20% to 22%.

The company is a leader in the fast-casual salad space and also has plenty of room to grow, with only about 225 locations today. Its Infinite Kitchen technology — an automated food preparation system — adds another way the company differentiates itself.

So far this year, Sweetgreen shares are up 225%.

3. Caravan

Carvan (CVNA 0.47%) was one of the biggest surprises on the stock market in recent years. The online used car dealer was left for dead in 2022 as its rapid growth stalled and the business was on the brink of bankruptcy.

However, through aggressive cost cutting and stabilization in the used car market, Carvana has bounced back, and the stock has continued to rise this year, up 194% year-to-date.

By drastically reducing inventory and restructuring debt, Carvana was able to generate positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and net income according to generally accepted accounting principles (GAAP).

Carvana 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 reduce its interest expense, which is still a significant cost to the company at more than half of its operating income.

Are Cava, Sweetgreen and Carvana acquisitions?

All three of these stocks have turned in blistering performances this year, with Sweetgreen and Carvana falling more into the recovery category than Cava.

Of the three, Cava looks the most attractive right now, as its execution and results have been near-perfect since the 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, appears to be the riskiest of the stocks as it still carries substantial debt and the cyclicality of the used car market can be brutal, although falling interest rates should be a tailwind for the company.

Ultimately, Sweetgreen is another compelling 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 this stock to Nvidia, it’s important to understand that Nvidia’s upside potential is likely quite limited right now. With Nvidia’s market cap of over $3 trillion, even gaining 50% of this would mean a market cap of over $4.5 trillion, and no company has ever reached the $4 trillion market cap of dollars.

That’s not to say it can’t be done, but if you’re looking for the next five- or 10-bag stock, you might be better off shifting your focus from Nvidia to a smaller growth stock like Cava, Sweetgreen, or Carvana.