When investors look to growth stocks, they might not think about the consumer space. But consumer stocks in the growth category often rise above $100 per share rapidly.
Today, investors can buy whole shares of some excellent, high-growth, consumer companies within a $100 budget. Those looking to invest such amounts should consider Dutch Bros (BROS -0.66%) and Ollie's Bargain Outlet Holdings (OLLI 1.27%).
Dutch Bros
Dutch Bros is a drive-thru chain of coffee shops with explosive growth that has begun to emerge as a major competitor to Starbucks and Dunkin Donuts. It started in 1992, and a nationwide rollout and initial public offering (IPO) in 2021 has piqued the interest of investors.
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Dutch Bros has drawn attention through marketing its beverages with names like the Annihilator and the Caramelizer. And its drive-thru business model mitigated the effects of the pandemic since it doesn't have indoor seating. The company says its culture is built on "caring leadership" that "loves everyone."
The coffee chain now operates more than 500 locations in the western and southwestern U.S., and plans at least 125 new locations in 2022. Its long-term goal is to reach at least 4,000 locations in the next 10 to 15 years.
So far, so good. In 2021, Dutch Bros generated $498 million in revenue, 52% more than in 2020. Still, the company lost $121 million as selling, general, and administrative expenses surged 152% due to much higher stock-based compensation costs. But with the planned expansion, it expects to generate between $700 million and $715 million in revenue in 2022, a 48% increase at the midpoint.
Early investors should be pleased. Dutch Bros stock has risen 58% since its IPO last September despite a 30% drop from its high. Furthermore, its price-to-sales (P/S) ratio of six is higher than the P/S multiple of four for Starbucks. Dutch Bros' growing popularity and rapid expansion could boost investor returns still further.
Ollie's Bargain Outlet
Discount retailer Ollie's prospered in previous years by living up to its motto as a place to "get good stuff cheap." It buys excess inventory from other stores at a steep discount and resells it at a low price in its 433 stores across 29 states.
Unfortunately, with supply-chain constraints, fewer stores have excess inventory to sell to Ollie's. With fewer goods to resell, revenue growth has temporarily turned negative, causing the stock price to plunge by more than 50% from its 52-week high.
But for all the alarm about the supply chain, companies that sell to Ollie's will probably resolve the issue over time. And with rising concerns about inflation and the economy, more consumers will likely focus on saving money. That should help Ollie's.
In 2021, revenue of $1.75 billion was 3% below prior-year levels. Along with the lower revenue, expenses for sales, general, and administration; depreciation and amortization, and income taxes all increased. So even though Ollie's earned net income of $157 million under such conditions, its profits fell 35% year over year.
For fiscal 2022, the company forecasts revenue between $1.91 billion and $1.93 billion. Though that would signify a 10% gain from 2021 levels at the midpoint, consensus analyst estimates previously stood higher at $1.94 billion, implying greater-than-expected challenges with its recovery. The company also plans to increase its store count by 46 to 48, including two relocations.
Its price-to-earnings ratio of 15 is at an all-time low -- down from over 50 in mid-2020. Even with its near-term struggles, that valuation likely makes the retail stock a bargain for a company on track for as much as double-digit revenue growth.
