Successful investing involves steady, consistent stock purchases over many years, letting the magic of compounding do its work. The S&P 500 has delivered an average annualized gain of 10.3% over the past 20 years, so even just investing in a simple index fund could help you achieve long-term wealth.

However, if you invest in a diversified group of individual stocks that you have confidence in, you could achieve greater wealth much faster. Finding that one ticket to millionaire status is a rare occurrence that can happen if you choose the right stocks. Can hot growth stock Cava Group (CAVA 2.17%) be that stock?

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Why investors are excited about Cava

Cava owns a chain of fast-casual restaurants with a Mediterranean vibe. It's following in the footsteps of fast-casual leader Chipotle Mexican Grill, which has created incredible wealth for long-term shareholders. Investors who missed out on that are hopeful that Cava can do the same thing for them.

The story so far looks very compelling. Cava only operated 367 stores as of the end of 2024, but they're demonstrating high comparable sales growth, indicating long-term viability for the stores and the concept. Comparable sales growth increased 21% year over year in the 2024 fourth quarter, and contribution margin expanded by 50 basis points to 22.4%. Average unit volume increased from $2.78 million to $2.87 million, and that leads to stronger per-store profitability as fixed costs extend to cover more sales. Net income increased from $2 million to $78.6 million year over year in Q4.

The company opened 58 stores in 2024 and plans to open about 64 this year. That's steady growth that adds loads of new revenue and still allows for a long-term growth runway that should last many years.

Risks and valuation

One positive metric to note is that comparable sales growth isn't only coming from price increases. Traffic increased 9% year over year in 2024. At first glance, that's an excellent showing, but management has been transparent that Cava might be getting extra attention as a new company, and it could slow. In fact, management is guiding for comparable growth of 7% in 2025, drastically lower than the 13.4% last year.

The good part about this is that just getting new customers in the door gives Cava the chance to impress and attract new loyal business. But the flip side is that curiosity wanes and comps keep slowing. Even the expected 2025 rate would be a strong showing, but not necessarily high enough to warrant Cava's astronomical valuation.

Cava stock is down 18% this year, and even at the current price, it trades at a forward, 1-year price-to-earnings ratio of 130. That's a lot lower than it has been in a euphoric bull market, but it's still quite high. On the one hand, the market expects a lot from this stock. On the other hand, there's a lot of growth built into that price.

Can Cava stock make you a millionaire?

Getting back to the original question, let's take a look at a hypothetical scenario. Sales increased 33% last year, but even with more new stores in 2025, growth is likely to slow as comparable sales decelerate. Let's imagine that the company can keep a compound annual growth rate (CAGR) of 15% for the next 10 years. Cava will have $3.9 billion at the end.

Right now, Cava stock sports a price-to-sales ratio of 11. Let's assume that goes down, and in 10 years it's 5. That would give Cava stock a market cap of $19.5 billion, or just under double today's market cap of $10.7 billion. That's just one possibility out of many, but it's a pretty balanced look at what could happen over the next 10 years.

If you have some appetite for risk and a long time horizon, Cava could be an excellent part of a growth-oriented portfolio. But Cava came onto the market with a lot of expectations built in, and on its own, it may not be your ticket to millionaire status.