Investors are concerned about several macroeconomic factors these days, but the market is hesitantly making its way back up, and the S&P 500 has gained 3% so far this year.
While many stocks are in a similar boat, and the broader market reflects this, there are plenty of stocks beating the market this year by a wide margin. Dutch Bros (BROS +5.64%) stock is up 34% year to date.
Let's see why investors are enthusiastic about Dutch Bros and why it's an excellent candidate if you have $1,000 available to buy stocks right now.
A Dutch Bros on every corner?
Dutch Bros is a fairly small coffee shop chain that has large ambitions. It went public three years ago with 500 stores, and it just opened up its 1,000th store. Although concentrated on the West Coast for now, it's expanding across the country and has a presence in 18 states.
At a recent investor day event, management provided several exciting updates about its plans. Its short-term goal is to reach 2,029 stores by 2029, which would be an acceleration from its current store opening schedule, opening another 1,000 stores over the next five years, or about 200 stores annually. It opened 151 stores last year and said it would open at least 160 this year. It disappointed investors last year, coming in at the low end of its initial store opening guidance, attributing that to restructuring its real estate model. It's now planning to open at a higher rate, but with better terms and locations.
Image source: Dutch Bros.
Longer term, Dutch Bros raised its total opportunity from 4,000 stores to 7,000 stores. That's increasing the store count sevenfold, and it's easy to see how that should supercharge growth and the stock price.
It's also easy to envision it coming to fruition since customers are happy and loyal. Comparable sales have been on the rise, increasing 4.7% year over year in the first quarter of 2025. It's also growing its membership program, which generates loyalty, builds its brand, and creates a moat. The company recently rolled out a mobile program, and mobile orders are increasing as a percentage of the total. In some newer areas, mobile penetration is already twice the level of the total.
Dutch Bros has several levers to pull to boost growth. It's experimenting with its food menu, which management says leads to higher beverage sales, and it's opening stores in formats that suit different locations. While most of its stores are only drive-thru, it also has dining rooms and walk-up windows in select locations.
Profitability at scale
Dutch Bros isn't quite a young company, even though it's still new for many customers. It's newly public, and only recently started on a large expansion strategy. It recently hired an experienced CEO to take it from a small, founder-led chain to a serious, large enterprise, and Christine Barone has revamped the C-suite to turn her vision into reality.
NYSE: BROS
Key Data Points
At this kind of high-growth stage, many companies aren't profitable. But Dutch Bros reported its first annual net profit in 2023 and has reported a profit for the past five quarters. In the 2025 first quarter, net income increased from $16.2 million to $22.5 million.
Since it's still laying the groundwork for an extreme expansion, opening and launch costs are still high. Expect margins to widen and profits to increase as the company continues to scale profitably.
Priced for perfection
The major risk for Dutch Bros today is its valuation. Dutch Bros stock is extremely expensive, trading at a P/E ratio of 180. That has plenty of growth built in, and it makes the stock susceptible to any negative news.
If you would need to pull out your investment in the near future, Dutch Bros might not be the right stock for you. But if you can hold it for at least five years or longer, it could be a valuable part of a growth-oriented portfolio.
