Meet the Monster Stock That Continues to Crush the Market

The market's been swinging back and forth over the past few days as companies, and investors, try to follow President Trump's tariff directives. Tariffs, tariff changes, and tariff pauses are creating excitement, although not necessarily the enjoyable kind.

During this time, many stocks are proving their worth. Dutch Bros (NYSE: BROS) is the kind of young, risky stock that doesn't usually do well when there's volatility, but it's up 9% this year, while the S&P 500 index is down 10%. Over the past year, it's absolutely crushed the market.

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Let's see why Dutch Bros stock is so hot right now and why it should continue to crush the market.

How customers like their coffee

Starbucks' continued struggles should serve as a cautionary tale to any investor. It's not done for at all, but it's gotten so big that it's hard to steer.

What does that have to do with Dutch Bros? The coffee shop chain saw an opportunity to build its brand just as Starbucks was beginning to have a hard time. Dutch Bros is newer, more agile, and has a different vibe. The stock is also cheaper, which means a lot in this economically challenged environment. The founder-leaders took the leap, and the company has been thriving over the past few years. It's only been a public company since 2021, but it's already almost doubled its store count and more than doubled its revenue over the past three years.

Based in Oregon, the company recently surpassed 1,000 stores, mostly located along with West Coast, with a large presence in California. But it's moving across the country at a steady pace, and it's live in 18 states. Customers enjoy its quick and friendly service, ease of ordering, and fun, custom-crafted beverages.

Revenue increased 35% year over year in the 2024 fourth quarter, driven by 32 new shops and a 6.9% increase in same-store sales. Company-operated shop contribution margin, which measures how profitable it is on a store basis, improved by 2.8 percentage points to 21.4%. Net income increased from a $3.8 million loss in the year-ago quarter to positive $6.4 million, and full-year net income increased from $10 million to $66.5 million.

Order another cup

Management sees a huge opportunity ahead, and considering how well Dutch Bros is capturing market share today, it looks like a very compelling thesis.

It recently raised its long-term store total goal from 4,000 to at least 7,000, or seven times the number it has today, with the short-term goal of hitting 2,029 by 2029. That's an incredible opportunity from an investing perspective, especially because comparable sales growth is accelerating, even in the tough economy. It's likely to accelerate more when the environment is more friendly to discretionary spending.

Dutch Bros opened 151 stores last year, and it's planning to increase that to at least 160 stores this year. It hired a new CEO last year who's been making many changes to put the company in position to be able to handle more scale, and the company is demonstrating the capabilities to change its model to embrace current trends in ordering and technology. It recently launched mobile ordering for the first time and is seeing positive results, and combined with a robust membership program, that should be a strong growth driver in the near and long term.

Don't wait to buy this market-crushing stock

It's not hard to see why the market is loving this stock, but it's not cheap at the current price. There are bargains to be had in the volatile market, but this is not one of them, trading at a forward, 1-year price-to-earnings (P/E) ratio of 69 at the time of this writing.

However, it's not likely to get much cheaper. This would have been the time for the stock to plunge, but although it's been up and down with the market, it's holding fairly steady. Investors see Dutch Bros' incredible potential, which is why it gets a premium valuation. If you have a long time horizon and some appetite for risk, Dutch Bros could be an excellent addition to your portfolio.

Should you invest $1,000 in Dutch Bros right now?

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