These 3 Stocks Tripled in 2024. Which One Is the Best Buy for 2025?

Sweetgreen (SG) is a salad restaurant chain that became publicly traded in 2021. At the beginning of 2024, the stock was down nearly 80% compared to its initial public offering price. It looked like investors had lost interest in this stock. However, the year 2024 turned out to be quite different. By November 2024, Sweetgreen's stock price had more than tripled.

While Sweetgreen ended the year with some of its gains diminished, it still showcased a remarkable recovery. Additionally, two other stocks, Reddit (RDDT) and IonQ (IONQ), also saw substantial increases, with both of them more than tripling in value throughout 2024.

This article will explore the factors behind the success of these three stocks in 2024 and analyze which one might be the best option for investors looking ahead to 2025.

Sweetgreen: up 184%

Sweetgreen was viewed as a high-growth company when it went public, but its financial losses were concerning to many investors. Toward the end of 2023, management began to confront these issues by introducing a new vision called the Infinite Kitchen model. In 2024, investors began to appreciate this vision.

The concept of the Infinite Kitchen revolves around automation. This involves using kitchen technology to allow robotic machines to handle much of the meal preparation, which could be revolutionary.

In the first three quarters of 2024, Sweetgreen spent 28% of its revenue on labor and associated costs—its biggest operating expense. If automation can significantly reduce these costs, it would tremendously boost profitability.

The Infinite Kitchen initiative is just beginning to scale up. At the beginning of the third quarter, only two out of 225 restaurants were equipped with these automation upgrades. However, by the end of the third quarter, this number increased to ten. As they ramp up this effort in 2025, investors are optimistic about the potential for profits to rise as a result.

Even though revenue growth is decelerating as the company prioritizes profitability over expansion, its earnings before interest, taxes, depreciation, and amortization (EBITDA) are already improving. The full impact of the Infinite Kitchen has yet to be realized.

Reddit: up 224%

The 224% increase in Reddit's stock price is particularly noteworthy because it only had a partial year to achieve this—its initial public offering occurred in March. Nevertheless, the company's financial performance is too impressive to overlook.

Over the last two years, Reddit has seen rapid revenue growth, which is rare among investments. In the third quarter, revenue shot up 68% year-over-year to reach $348 million. This surge is driven by a significant increase in users and an uptick in advertising demand.

Reddit's gross margin has also improved, reaching over 90% in the third quarter. With higher revenue and gross margins, the company's free cash flow has surged as well.

One key factor fueling Reddit's growth has been its expansion into international markets. By leveraging artificial intelligence (AI) to translate content into different languages, Reddit is attracting more users from those regions.

IonQ: up 237%

IonQ experienced a staggering increase of over 400% in the last three months of 2024, culminating in a tripling of its stock value for the entire year. However, it’s prudent to view quantum computing stocks like IonQ with some caution, given the rapid growth of the sector.

Investors often lack the expertise to fully understand the intricacies of quantum computing, making it challenging to gauge the worthiness of a company like IonQ. They employ a trapped ion approach, which is just one of many methods in the quantum computing space.

Given this lack of firsthand knowledge, third-party validation becomes essential. IonQ’s hardware is available on all the major cloud platforms, which sets it apart from competitors. Notably, the U.S. government has also expressed confidence in IonQ, signing a $55 million contract with them to address practical applications of quantum computing.

And my top pick for 2025 is...

A lot of analysts speculate that the quantum computing sector could be worth hundreds of billions in the future. If IonQ manages to lead this technological frontier, it might have significant long-term potential.

As for Reddit, the company is growing rapidly and has barely tapped into its international audience, which has only around 49 million users outside of the U.S. The potential for exponential user growth makes it an intriguing option.

While IonQ and Reddit hold promise for 2025, I believe Sweetgreen stands out as the more compelling option due to its valuation. Currently trading at five times its sales, Sweetgreen may not seem inexpensive for a restaurant chain facing slowing growth. However, focusing on profitability has slowed revenue expansion. If the Infinite Kitchen proves to enhance its profit margins, the management might resume aggressive expansion.

The company has hinted at possibly reaching 1,000 locations in the future, compared to under 250 today. The crux lies in reducing operating expenses, which Sweetgreen appears poised to achieve. Therefore, among the three discussed, Sweetgreen is my top recommendation for 2025.

Note: The author does not hold shares in any of the mentioned companies.

Stocks, Investing, Growth