2 Supercharged Growth Stocks That Are Crushing the Market

The S&P 500 continues to climb this year, and it's up nearly 24% as we get closer to the end of 2024.

Although there's strong market momentum, there's also concern that valuations are inflated and the market could drop. The reality is that it's no different than any other time. No one knows with certainty where the market is going. So it's always important to be prepared for ups, downs, boring movements, and black swan events with a diversified portfolio, including secure stocks.

Keep your eye on the goal -- long-term investing involves paying attention to where a stock could be in five, 10, or 20 years and longer and not getting too concerned by short-term events. If you can do that, you'll find some excellent stocks to buy.

Dutch Bros (NYSE: BROS) and On Holding (NYSE: ONON) are two incredible growth stocks that are crushing the market today and could supercharge your portfolio over the next few years.

1. Dutch Bros: The new coffee shop on the block

Dutch Bros is a small coffee shop chain mostly located on the U.S. West Coast, but it's rapidly spreading across the country and won't stay small for long. It has demonstrated strong growth throughout its years on the stock market, and it's opening stores at a fast pace. Plus, it's becoming sustainably profitable, and it has a long growth runway while it rewards investors who buy and hold.

The market has gone back and forth about Dutch Bros, but the roots of a good business have been strengthening. It all starts with a great product, and Dutch Bros' fans love its coffee, service, and culture. It has a distinct feel and brand presence, and its store opening team makes sure its perfected formula is rolled out deliberately in each new store. As of the end of the third quarter, it has 950 stores in 18 states, and it plans to have as many as 4,000 stores over the next 10 to 15 years.

Despite the challenging microenvironment, Dutch Bros has reported double-digit sales growth and increasing profits. In the 2024 third quarter, sales increased 28% year over year, and same-store sales were up 2.7%. That's not objectively a great showing for same-store sales, but it was a win given the difficult environment. Adjusted earnings per share (EPS) were $0.16, solidly beating Wall Street's expectations.

It looks like the only way to go is up. Don't expect linear movement, and the stock could rise and fall on the whim of a quarterly report. But Dutch Bros stock is crushing the market right now, up 54% year to date, and I expect that to continue.

2. On Holding: Challenging the footwear giants

It's not easy to break into an industry already ruled by a few massive companies, but On is establishing a strong brand as the pinnacle of running shoes. Its shoes have a unique, tell-tale sole that loyal customers love, and On is leveraging its popularity to launch new shoes and a complete apparel collection.

It recently rolled out an innovation it calls LightSpray that literally sprays a shoe onto a mold with a robotic arm in a three-minute process. It's just the latest way this small Swiss company is revolutionizing athletic footwear and making a name for itself.

The results tell the story. Sales increased 32% year over year in the third quarter, driven by a 50% increase in direct-to-consumer sales. That says a lot about how On is connecting with its customers and creating relationships. It also helps fuel the highest gross margin in the industry, which expanded to 60.6% in the third quarter. The gross margin is also benefiting from On's premium positioning, and it has a high full-price sales rate.

Customers are willing to pay for On's products, and its affluent and resilient customer base is paying up, inflation or not.

On is just getting started. It has still barely penetrated most areas, even affluent ones where it's likely to amass strong sales. As of the investor's meeting last year, it had only 47% brand penetration in its own headquarters of Switzerland, and that figure was much lower in many U.S. cities. However, management said that brand awareness has surged since its presence in the Paris Olympics and a partnership with celebrity endorser Zendaya.

On stock is up 96% this year, but there's still time to buy this market-crushing stock.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $380,291!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,278!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,003!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool recommends Dutch Bros and On Holding. The Motley Fool has a disclosure policy.