Despite a difficult year for consumer spending, Dutch Bros remains on track with its growth strategy. Revenue rose 28% year over year last quarter, with same-store sales up 2.7%. This indicates an offering that resonates with people and generates repeat purchases similar to other major beverage chains like Starbucks.
Dutch Bros has consistently seen revenue growth of around 30% or more over the past few years. The only reason why the stock is not keeping up with this growth is profitability. But here too, Dutch Bros is doing well for a small catering company. Net income jumped 62% year over year to $22 million in the third quarter.
Dutch Bros has enormous opportunities to continue to grow. It operated just 950 stores in 18 states in the most recent quarter. The stock rebounded sharply following the company’s third-quarter results, but it’s not too late to get in on the action. The company’s long period of growth can still generate excellent returns over the long term.
It is the dominant e-commerce platform in Latin America, serving a region with a population of over 500 million. Amazon serves the United States. People rely on it for many of their purchases, in growing numbers and with increasing engagement. For example, the number of customers who purchased in three or more categories increased by 468% between 2019 and 2023, and the average number of quarterly products per buyer increased from 4.4 to 7.1.
It has high next-day and two-day shipping rates, and as more suppliers join its logistics network, it benefits from a flywheel effect consisting of the membership of a more customers, more suppliers and increased revenue. This creates incredible profitability at scale. Latin America is still underpenetrated in e-commerce, which is why MercadoLibre is growing rapidly and still has a long runway for growth.
Alongside the performance of the e-commerce business, MercadoLibre has a fintech business that is growing even faster. What started as a way for underbanked customers to pay for purchases has grown into a comprehensive financial services app that includes credit cards, digital payments, investment tools, and more. It has developed a strong credit business, highlighted by its rich data stores, resulting in effective risk management and low costs. It is the leading fintech platform in three of its top four regions in terms of monthly active users, which continue to increase, and as it adds customers to its ecosystem, it enjoys a rate of lower churn, higher engagement and lower credit risk than consistently. users create.
The company continues to improve its business and develop new segments and services, such as a growing advertising business and an e-commerce membership program, both like Amazon.
As impressive as it already is, MercadoLibre offers huge long-term opportunities and is likely to continue to crush the market over the next five-plus years.
Jeremy Bowman (Sweetgreen): Not all restaurant stocks are this Chipotle Mexican Grillbut Sweetgreen is one of the most intriguing restaurant stocks to hit the market in recent years.
The company is the nation’s largest fast-casual salad chain, offering a unique take on the fast-casual model that has been so successful with peers like Chipotle. Sweetgreen generates average unit volumes of $2.9 million, among the best in the industry and a clear sign of the popularity of its product.
In the second quarter, same-store sales jumped 9%, showing the company’s momentum, and it currently has plenty of room to grow with just over 225 locations.
However, the biggest reason the stock has the potential to crush the S&P 500 by 2030 is its adoption of technology, particularly Infinite Kitchen, its robotic assembly line system that speeds throughput and increases the average ticket and company margins.
The technology is being rolled out to more restaurants, and that could be a long-term game-changer as the company expands across the country and plans to reach 1,000 restaurants by the end of the decade.
Given the company’s high average unit volumes, Infinite Kitchen could also help boost its bottom line, as the company is still not profitable based on generally accepted accounting principles (GAAP). However, its profitability is improving, and if it can accelerate its margins to match those of more established fast-food chains, Sweetgreen stock should soar over the rest of the decade.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil holds positions at MercadoLibre. Jeremy Bowman holds positions at Amazon, Chipotle Mexican Grill, MercadoLibre and Starbucks. John Ballard holds positions at Dutch Bros and MercadoLibre. The Motley Fool posts and recommends Amazon, Chipotle Mexican Grill, MercadoLibre, and Starbucks. The Motley Fool recommends Dutch Bros and Sweetgreen and recommends the following options: Short December 2024, $54 at Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
3 Unstoppable Stocks That Can Crush the S&P 500 by 2030 was originally published by The Motley Fool
