No one knows when a stock market crash will happen, so even this long into a bull market, investors should still be focused on the long term. While the S&P 500 briefly dipped into correction territory, it bounced back off its lows and could be poised to trend higher again.
Trying to time the market is a fruitless effort, so simply continuously adding money into the market by focusing on finding the companies with good long-term prospects is the smart strategy to accumulate generational wealth. These two stocks represent just that sort of explosive opportunity.
1. Dutch Bros
Coffee hardly seems to be the game-changing investment many investors are looking for, but Dutch Bros (BROS 3.11%) is a fast-growing coffee shop chain with plans to accelerate its store openings going forward.
Dutch Bros has over 500 locations in 12 states but just changed how it intends to finance its growth in the future. It will use a ground lease model that gives it ownership of its stores (while leasing just the real estate underneath them) rather than a build-to-suit lease model where a third party owns everything but builds a store to your specs.
The latter model helps young, cash-strapped companies get up and running quickly, while the former gives them a greater say in their future. It costs a little more up front, because the company is putting out its own cash to build the building, but it's a cheaper alternative in the long run and is popular in retail.
Dutch Bros has enjoyed rapidly rising sales from both organic growth and adding new stores, and it's found its new stores are already performing above average, so it should recoup its costs faster from the change. It might not look pretty on the financial statements at first, but it should cause stellar results down the road.
Its business is growing faster than either Starbucks or Dunkin Brands, with geolocation data analytics firm Placer.ai discovering customer traffic at Dutch Bros coffee shops exploding over the past two years.
Shares of this recent initial public offering sit 30% below the highs they attained soon after going public last September, but with analysts expecting revenue to soar to $1.2 billion by 2024 for a compounded growth rate of 34% annually, this is a coffee stock that should serve up piping-hot returns for investors.
2. Smith & Wesson
Firearms sales continue their long-term trend higher, with FBI criminal background checks on gun buyers jumping 20% in March from the month before. Even when adjusted to remove duplicate checks on existing concealed-carry permit holders to see if they're still eligible to have a permit -- an effort the National Shooting Sports Foundation (NSSF) undertakes every month to get a better sense of actual consumer demand for firearms -- it found even greater latent demand, with 23% more checks being performed.
That's still down from 2020 and 2021, two record-setting years for firearms sales, but this year is still shaping up to be one of the best years ever for the industry. This is why investors ought to consider Smith & Wesson Brands (SWBI -1.36%) for their portfolio.
With a storied history stretching all the way back to the 1850s, Smith & Wesson is the country's premier gunmaker that will continue to benefit from continued massive interest in self-protection.
Its stock is trading at historically low valuations even for a company that's not known for trading at a premium. Smith & Wesson goes for just 3 times trailing earnings, 6 times next year's estimates, a tiny fraction of sales and analyst forecasts for long-term earnings growth, as well as just 3 times the free cash flow it generates.
With over 1 million people looking to purchase a firearm every single month for nearly three straight years, the health of the firearms industry is assured. And many of those sales are made to first-time buyers. The NSSF found 5.4 million people purchased their first firearm in 2021.
But at extremely discounted levels, Smith & Wesson is a stock to shoot out the lights for your portfolio for years to come.