Is it too late to buy Sweetgreen shares?

Actions of Sweetgreen (SG -2.03%) have soared in 2024. Shares have gained 223% year to date, erasing the price slump that followed the 2022 inflation crisis.

This significant price increase raises some natural questions for potential Sweetgreen investors. Is it too late to buy stock in the fast-casual salad chain, or can growth continue from here?

Let’s see what happens.

Sweetgreen’s previous fights

Sweetgreen’s recent price hike wasn’t exactly a triumphant victory march. Instead, it was more of a return to full health after a stay at the Wall Street stock hospital. Oddly enough, taking to the sky is easier if you launch from an underground platform. That’s what Sweetgreen is doing in 2024.

The company and the stock could hardly catch a break in 2022 and 2023. Earnings and revenues were consistently below analysts’ expectations during that period. The biggest problem with this trend is that analyst expectations were based on Sweetgreen’s official guidance targets. It’s one thing to miss arbitrary targets and another to post results below management’s operating plans.

Bottom line results remained subdued in 2024, but investors were impressed by a return to healthier earnings growth this year. Shares rose 28% on March 1, fueled by a mixed earnings report with decent guidance for the next fiscal year. At the time, the stock was priced as an absolute disaster, trading at just 2.4 times sales on the eve of that fourth-quarter report. That’s a weak valuation for a high-octane growth stock — Sweetgreen’s top-line sales rose 24% year-over-year in the previous report, and that meteoric growth rate was a slowdown from previous peaks.

What’s going on behind the curtain?

So Sweetgreen’s recent price hike isn’t necessarily a sign of the business’ stellar success. Plus, that leaves room for additional earnings.

The company is doing everything it can to unlock those potential earnings. Infinite Kitchens’ salad preparation system can automate the cooking process and reduce Sweetgreen’s staff costs. CFO Mitch Reback aims to install these automated settings in about half of his new stores. Older locations may not have the right facilities or enough space for it. That technology upgrade should boost Sweetgreen’s profit margins over the long term, and the company is already nearing breakeven for bottom-line earnings.

It’s also rolling out new menu items for the first time in years. After a successful test in three test kitchens in California, the entire store chain now offers caramelized garlic steak in addition to the classic protein options of salmon and chicken.

Sweetgreen can cook up additional winnings

Sweetgreen doesn’t sit on its hands. It is a fast growing restaurant chain with a health conscious menu. And even after tripling its share price in 2024, the stock is still trading at a rather modest 66.5 times sales. The stock isn’t on sale, but it’s cheaper than shares of high-growth restaurant peers WingStop or Cava.

The stock could be a good fit for growth-oriented investors with an eye for headwinds in the restaurant sector. Salads and low-sugar foods are all the rage these days, and Sweetgreen is a trendsetter in this space.

So I don’t think it’s too late to get into Sweetgreen’s growing stock. You missed the best time to jump on board, but market opportunity is always a gamble anyway.

If you’re worried about price drops related to upcoming earnings reports, you can always keep that investment small or even set up an automated dollar cost averaging plan to mitigate the effects of buying a volatile stock. Sweetgreen can benefit from automating its kitchens, and you can do the same with your stock buying process.