Dutch Bros (BROS -0.03%) stock jumped 19% in January, according to data from S&P Global Market Intelligence. There was no news specific to Dutch Bros, but it benefited from improving investor sentiment as Donald Trump became president and excitement as we get closer to Dutch Bros' fourth-quarter report next week.

There's a lot to love about Dutch Bros

Dutch Bros operates a growing chain of 950 coffee shops. When it went public in 2021, it was available in only 11 states, but it has since almost doubled its store count and is now available in 18 states. It has a long-term growth strategy to reach about 4,000 stores over the next 10 to 15 years while opening across new regions.

It offers its own spin on the coffee shop concept, emphasizing speed, service, and community, and it empowers its "broistas" with point-of-sale devices to take orders while customers are in the drive-through, often completing their orders before they get to the window. Because most of its fleet is new stores, it has been able to design them with current trends in mind, such as double drive-through windows and walk-up windows. It only recently launched a mobile program, which has since rolled out through most of its portfolio, and that integrates well into its store design process.

New stores are driving most of the company's growth, as inflation is resulting in lower same-store-sales growth. Total company growth has been stellar, and revenue increased 28% year over year in the 2024 third quarter. Same-store sales increased only 2.7%, but the good news is that it isn't only coming from increased prices -- transactions were up in the quarter, too.

Inflation is still a problem, and both company-operated gross margin and company-operated shop contribution margin were slightly down year over year. But it's turning a tidy profit, and net income was up from $13.4 million in 2023 to $21.7 million in 2024 in the third quarter.

There's only one thing that isn't looking so good

Dutch Bros has been very successful in getting its name out in new regions and recruiting new customers to its brand. There isn't much debate about its chances of keeping that up, capturing market share and building its presence across the country.

However, Dutch Bros stock is climbing, and so is its valuation. Dutch Bros stock is up 140% over the past year, and it trades at a P/E ratio of 223. That's already getting into nosebleed levels. At the same time, it trades at a PEG ratio of only 0.36, which means it could be a reasonable valuation based on its earnings growth.

I am a big fan of Dutch Bros stock, but new investors may want to wait for a better entry point before dipping in.