Many investors dream of discovering a growth stock capable of doubling or even tripling their money over the long term. If this is your goal, focus on small, fast-growing businesses with strong economic moats and a pathway to profitability. Soho House & Co (SHCO -2.29%) fits the bill. Let's discuss why it probably won't stay this cheap for long. 

What is Soho House & Co?

Formerly known as Membership Collective Group, Soho House & Co operates a collection of luxury-oriented hospitality services such as co-working spaces, a furniture store, and its flagship private members club, Soho House. Founded in 1995 in London, England, the club began as a members-only association for people in the creative industry. Now, it has expanded to 41 locations across North America, Europe, and Asia.

Soho House has an exceptional economic moat -- a term referring to its ability to protect its business from competition. As a luxury service provider, it appeals to people's need for status and belonging. And by focusing on the creative industry, it also offers networking opportunities that could become invaluable to the customer's career or social life.

The club's greatest appeal might be its exclusivity. People tend to value things that are hard to attain. And Soho House is known for attracting global elites such as former actress Meghan Markle (who met her husband Prince Harry at one of its London clubs) and a slew of A-list celebrities such as Leonardo DiCaprio, Justin Timberlake, and Oprah Winfrey. It also isn't afraid to reject celebrities either, with billionaire influencer Kim Kardashian reportedly turned away numerous times from its renowned Los Angeles location. 

First-quarter earnings were a slam-dunk success

Soho House's first-quarter earnings highlight the viability of its business model. Total revenue soared by 33% year over year to $255 million because of an increase in new members and their spending on in-house services such as food, drinks, and hotel room stays. The company is driving continued growth by expanding to new markets, such as Bangkok, Thailand, where it opened a new house in the first quarter.

Green stock arrow moving upwards.

Image source: Getty Images.

With only two other locations on the Asian continent, international expansion provides an excellent opportunity for Soho to grow its reach without oversaturating core markets in the U.S. and Europe. The strategy will also create a network effect by giving existing Soho House members access to a wider array of properties around the globe. 

With 89,000 people on the membership waitlist, demand for Soho House remains fantastic. And the company can essentially grow at will. Management plans to open five to seven new locations in 2023 to help tap into some of this unmet demand. 

It's not too late to buy 

Soho House still operates a relatively immature business, which allows investors to get in on the ground floor of its long-term expansion. For me, the company's profit growth potential is most exciting. 

First-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surged roughly 10-fold from $2.3 million to $20.1 million year over year. This metric adds back noncash outflows such as interest expense and depreciation, but it gives a clear picture of the company's cash flow and ability to meet obligations. Soho House is also rapidly approaching profitability under generally accepted accounting principles (GAAP), with its net loss narrowing from $60.6 million to just $16 million in the period. 

As the business continues to scale, investors should expect Soho House's bottom line to surge. The company's stock price should soon follow.