Dutch Bros Stock Just Hit a 52-Week High. 3 Reasons Why It's Still a Great Buy in July.
Key Points
Dutch Bros has posted steady growth despite a challenging macro environment.
Its passionate shop operators reflect a culture built for success.
The brand is profitably expanding across the U.S.
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Investing in restaurant stocks at their early stages of expansion can be a simple and rewarding strategy for building wealth in the stock market. Dutch Bros fits the profile of a growth stock that famous investor Peter Lynch loved to find during his career managing Fidelity's Magellan Fund.
After consolidating for over a year, Dutch Bros' (NYSE: BROS) shares recently surged to a 52-week high of $74.65. The company's growth amid inflation and other economic headwinds is a testament to its brand strength. Here are three reasons the stock is a solid buy right now.
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Image source: Dutch Bros.
1. Brand resilience
The stock's recent surge followed another strong quarter. Revenue grew 31% year over year, driven by new shop openings and a healthy same-shop sales increase of 8.3%. This shows the brand driving balanced growth from existing and new locations.
What's more, management raised full-year guidance for revenue, same-shop sales, profitability, and new shop openings. It expects full-year revenue to be up 25% to 27%, to open at least 185 new locations, and to deliver same-store sales growth of 4% to 6%.
The first quarter marked the company's fifth straight quarter of transaction growth, which is a strong showing. Even iconic consumer brands like Starbucks and Nike have struggled to deliver meaningful growth to push their share prices higher. Dutch Bros' consistency in a challenging macroeconomic environment reflects a strong brand in the making.
2. Passionate culture
These results reflect strength in a highly competitive beverage-chain market. While its menu, which spans energy drinks, sodas, smoothies, and coffee, is certainly a draw for customers, management says the brand's biggest differentiator is its people.
The company emphasizes friendly interactions with customers, and this matters because Dutch Bros promotes new shop operators from within. And some of these operators are so passionate about the company that they have the brand tattooed on them.
These are intangible qualities that Wall Street analysts will overlook, but that can be vital to a company's long-term success. This is especially true in the restaurant industry, where making customers happy is fundamental to driving sales. Clearly, this company is run by incredibly passionate people. That's rare, and it says a lot about why Dutch Bros continues to post strong financial results.
3. Profitable expansion strategy
Dutch Bros had 1,177 shops open as of March 31, 2026. That covers 25 states, leaving plenty of room for nationwide expansion. Management is targeting 2,029 shops by 2029. But investors shouldn't think that it is recklessly expanding for the sake of growth.
Management scouts each location carefully. Its strategy is to cluster locations in a market so consumers will build their daily routine around visiting a Dutch Bros shop. This lays the foundation for billions in annual revenue through high daily sales volume over the long term.
This detailed planning is starting to show up in profitability. The company operated at a small loss through 2022, but since mid-2023, net income has been steadily growing. It generated $118 million in net income on $1.75 billion in revenue over the trailing 12 months.
The stock isn't cheap, trading at a forward earnings multiple of 76. But the stock looks expensive on a price-to-earnings basis because it's still in the early stages of scaling the business and leveraging expenses.
The price-to-sales ratio is a more useful valuation metric for valuing this company in the early innings of its long-term expansion. On that measure, Dutch Bros shares trade at 5.3 times trailing revenue. That's more reasonable and consistent with the ranges that Starbucks and Chipotle historically traded.
Overall, Dutch Bros' momentum in a tough environment, its passionate workforce, and its expansion opportunities make it a solid growth stock to buy in July.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Dutch Bros, Nike, and Starbucks. The Motley Fool recommends the following options: short September 2026 $35 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
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