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Russian (RU) John Ballard, Jeremy Bowman, and Jennifer Saibil, The Motley Fool
Mon, Apr 28, 2025, 6:45 AM 6 min read
In This Article:
Buying shares of growing companies and holding patiently for many years is a simple path to building wealth. When you can buy shares of these companies at lower prices, it can help boost your long-term returns.
To give you some ideas, read why three Motley Fool contributors see long-term upside in Dutch Bros (NYSE: BROS), Axon Enterprise (NASDAQ: AXON), and MercadoLibre (NASDAQ: MELI).
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Jennifer Saibil (Dutch Bros): Volatile market conditions are creating incredible buying opportunities right now, but not all stocks are plunging. Consider Dutch Bros. It's dropped over the past few weeks with the market turmoil, but it's still up 18% this year, crushing the market.
Why are investors so excited about this stock? Its long-term opportunity is incredibly compelling. It operates a chain of coffee shops and distinguishes itself with a down-to-earth brand, unique beverages, and low prices. It's also meeting this moment in time, with most of its stores exclusively drive-thrus, although it's opening new stores in different formats to meet location-based demand.
Unlike some giant competitors, it's new and agile and building out with omnichannel options, technology, and speed in mind.
The response has been very positive, leading investors to believe that this company can indeed expand from its current 1,000-store count to the 7,000 stores it envisions. It will take time, but that just gives investors more years to benefit. That number is still way behind leader Starbucks, implying that there's also room to keep expanding.
Revenue keeps growing at a rapid pace. It increased 35% year over year to $343 million in the 2024 fourth quarter, with same-store sales up 6.9% and same-store transactions up 2.3%. Company-operated shop contribution margin expanded by 2.4 percentage points to 28.9%, indicating that the company is getting more out of each store, and Dutch Bros is benefiting from strong economies of scale. Net income increased from a $3.8 million loss the year before to positive $6.4 million in the quarter.
At the current price, Dutch Bros stock still isn't cheap. It trades at a forward 1-year P/E ratio of 74. That tells you how much the market is expecting from this amazing stock, and if you buy today and hold for 10 years, you're likely to be well-rewarded.
Jeremy Bowman (Axon Enterprise): Axon Enterprise, the maker of Taser electrical weapons and body cameras, has dominated the stock market over the last 10 years, and looks poised to continue to do so over the next 10 years.
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