Meet the 1 Stock I'd Buy With $500 and Never Look at Again
Key Points
Dutch Bros is a fast-growing chain that expects to go from 1,225 stores to 2,029 in the next three years.
The shares have have fallen sharply over the last three months despite posting "beat and raise" results this summer.
With positive same-store sales for almost two decades, consistency paired with opportunity sounds pretty compelling here for the next $500 you have to invest.
- 10 stocks we like better than Dutch Bros ›
It started with two brothers selling espresso out of a pushcart in Oregon 34 years ago. Today, Dutch Bros (NYSE: BROS) has an empire of 1,225 stores offering coffees, energy drinks, and other handcrafted beverages.
If you're a fan of half and half, consider these two halves: Dutch Bros currently only has a presence in half of U.S. states. There's a lot of real estate left to cover. The stock has also been cut in half -- down 49% -- over the last three months.
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Image source: Getty Images.
Getting rich at the pour house
Putting your next $500 into Dutch Bros carries risks, but a closer look at the recent collapse shows the bullish thesis for Dutch Bros remains intact. The business is still growing. You have to go all the way back to the end of 2024 to find the last time revenue rose at least 33% the way it did in the chain's latest quarter.
Investors are rightfully concerned about the impact of rising interest and inflation rates on food and beverage retail concepts, but Dutch Bros just raised its guidance this summer. Comps remain positive, a trend that has now held for 19 consecutive years.
The expansion story is still there. Dutch Bros is less than 18% of the way to the 7,000 locations it expects to open across the country. The emphasis may be on revenue growth, but it's also been profitable -- and growing those earnings -- for four consecutive years.
You will pay a premium to own Dutch Bros, as you would most growth stocks. A benefit of coming in after the recent sell-off is that you can get in at just 28 times next year's projected earnings, a discount relative to its heady growth.
A single $500 investment won't set you up for life, but it's a great way to start a position in one of the market's more dynamic retail concepts. Being opportunistic? I'll drink to that.
Should you buy stock in Dutch Bros right now?
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dutch Bros. The Motley Fool has a disclosure policy.
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