What Makes Sweetgreen (SG) a Prospective Investment?

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Small Cap Growth Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The market rally continued in the first quarter of 2024, supported by positive inflation data and robust economic signs. The fund returned 6.04% (net) in the first quarter compared to the Russell 2000 Growth Index’s 7.58% return. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Meridian Small Cap Growth Fund highlighted stocks like Sweetgreen, Inc. (NYSE:SG), in the first quarter 2024 investor letter. Sweetgreen, Inc. (NYSE:SG) operates fast food restaurants serving healthy foods at scale. The one-month return of Sweetgreen, Inc. (NYSE:SG) was -1.79%, and its shares gained 192.44% of their value over the last 52 weeks. On June 18, 2024, Sweetgreen, Inc. (NYSE:SG) stock closed at $31.35 per share with a market capitalization of $3.552 billion.

Meridian Small Cap Growth Fund stated the following regarding Sweetgreen, Inc. (NYSE:SG) in its first quarter 2024 investor letter:

"Sweetgreen, Inc. (NYSE:SG) operates restaurants serving fresh and healthy foods in the United States. The salad-focused restaurant concept has invested heavily to develop a captive network of growers that help ensure the freshness of its produce, a distinct competitive advantage. Additionally, management’s investment in automation technology, known as the “Infinite Kitchen,” has shown strong promise of significant labor cost savings, a reduction of order fulfillment errors, and increased restaurant throughput. While Infinite Kitchen has only been tested in a handful of stores to date, initial data supports the potential for automation technology to significantly improve both margins and average unit volumes. The stock rose in the quarter on accelerating same-store sales growth and better than expected guidance from management. In addition, investors took notice that material margin improvements could quickly reduce Sweetgreen’s cash burn, a prior source of concern. Sweetgreen was a new position for the Fund in the quarter."

A chef in a professional kitchen demonstrating ways to use the company's products to cook healthy and functional food.

Sweetgreen, Inc. (NYSE:SG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Sweetgreen, Inc. (NYSE:SG) at the end of the first quarter which was 16 in the previous quarter. Sweetgreen, Inc. (NYSE:SG) reported sales of $157.9 million in the first quarter, up 26% year-over-year. While we acknowledge the potential of Sweetgreen, Inc. (NYSE:SG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.