Top 3 Growth Stocks Down 18% to 43% – Time to Invest!

Investing in growth stocks can significantly multiply your savings over the years. Companies in their early stages of capturing their addressable market often present some of the most rewarding investment opportunities. Currently, several promising stocks are trading below their highs, making them timely buys before a potential rebound. Here’s why three contributors from Fool.com believe that Cava Holding (NYSE: CAVA), On Holding (NYSE: ONON), and Toast (NYSE: TOST) are worth considering for your investment portfolio.

Cava Holding: A Mediterranean Gem

Cava Holding has been publicly traded for less than two years, yet it has already made significant waves in the stock market, delivering impressive multi-bagger returns. However, the Mediterranean fast-casual chain has experienced a sharp pullback since its peak last November, primarily due to concerns about its valuation and macroeconomic issues such as tariffs. As of March 5, Cava was trading down 43% from its peak.

Despite this sell-off, Cava’s performance remains strong. In the fourth quarter, same-store sales surged by 21.2%, indicating that the young restaurant chain is successfully attracting new customers and increasing visit frequency. Overall revenue also rose by 28.3%. The company has demonstrated robust results on the bottom line, with a restaurant-level profit margin of 25%, comparable to industry leader Chipotle.

Moreover, Cava’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) skyrocketed from $73.8 million to $126.2 million. The company has ambitious growth plans, aiming to expand from 367 restaurants at the end of 2024 to 1,000 by 2032, nearly tripling its store count. In comparison, Chipotle currently operates over 3,000 locations and plans to reach at least 7,000 in the long term. While Cava may still appear expensive by traditional metrics, its valuation has become more reasonable following the recent pullback. If the company maintains its growth momentum, this sell-off could represent a golden buying opportunity.

On Holding: The Rising Star in Activewear

On Holding is a fresh and innovative activewear brand that has quickly become a significant player in the industry. Its premium, high-priced products are attracting a substantial following, and the company continues to report strong growth and increasing profits, even as some competitors struggle in a challenging market environment.

The fourth quarter was nearly flawless for On, with sales increasing by 41% year over year (currency neutral), driven by a remarkable 49% surge in direct-to-consumer sales. The company boasts a comprehensive omnichannel strategy that includes wholesale and direct-to-consumer channels, alongside a robust digital presence and 50 physical stores. These stores not only serve as retail outlets but also reinforce the brand’s identity, which On is actively working to amplify.

While On is still in the process of building its brand presence, it has developed a loyal customer base in regions where it is recognized. Its clientele tends to be affluent, allowing them to afford the premium prices. Despite inflationary pressures, customers continue to support the brand. On is also strategically positioning itself to capture market share among the general population, further solidifying its growth potential.

Toast: A Tech-Driven Restaurant Solution

Toast (NYSE: TOST) is another promising growth stock that has garnered attention. As a technology-driven restaurant management platform, Toast provides a comprehensive solution for restaurants to streamline operations, enhance customer experiences, and drive revenue growth. The company has seen significant adoption of its platform, especially as the restaurant industry increasingly embraces digital transformation.

Toast’s innovative approach has led to impressive growth metrics, making it a compelling investment opportunity. As restaurants continue to recover from the pandemic, Toast is well-positioned to benefit from the ongoing shift towards technology-driven solutions in the food service industry.

In conclusion, Cava Holding, On Holding, and Toast represent three growth stocks currently down 18% to 43% that could offer attractive return prospects. As these companies continue to expand and innovate, they may present excellent opportunities for investors looking to capitalize on their growth potential. For more detailed insights, check out the original article here.