When a sector gets hit with bad news, investors sell first and look for winners later. CAVA Group (NYSE: CAVA) got caught in exactly that kind of move this month. After weak August dining traffic data hit the sector, CAVA dropped 8.9% in a single session, while Wingstop (NASDAQ: WING) fell 12.1% and Chipotle Mexican Grill (NYSE: CMG) slid 5.9%.
CAVA stock isn't a typical casualty. It's one of the most richly valued names in the restaurant group. Even after falling about 46% from its 52-week high of $98.79, it still trades near 98 times trailing 12-month earnings. That is almost quadruple the consumer discretionary sector average of roughly 25.
