"Is Dutch Bros Inc. (BROS) the Best Growth Stock Under $100 to Buy Now?"

In the ever-evolving landscape of the coffee industry, one company has been making waves with its rapid expansion and impressive financial performance: dutch bros inc. (BROS). With a stock price under $100 and a market cap of $11.8 billion, dutch bros has caught the attention of investors looking for the next big growth story. But is it the best growth stock under $100 to buy now? Let's dive in and find out.



Dutch Bros' rapid expansion is driven by several key factors. The company reported a same-store sales growth of 6.9% in Q4 2024, on top of 5% growth in 2023. This indicates that existing stores are performing well and attracting more customers, which is a strong indicator of the brand's appeal and market demand. Additionally, Dutch Bros had transaction growth of 2.3% in the quarter, its highest quarterly growth in the last two years. This shows that not only are customers spending more, but also that more customers are visiting their stores.

One of the key advantages of Dutch Bros' business model is its drive-thru stand concept, which makes the coffee and drink experience fun, enjoyable, and quick for its regular customers. This model is particularly appealing to younger customers who have become fans of the brand due to its popular drinks such as blended coffees and energy mixes. This focus on a quick and enjoyable experience sets Dutch Bros apart from competitors like Starbucks, which has been facing negative same-store sales growth and negative traffic growth to its stores.

Dutch Bros' national expansion opportunity is another advantage. In 2025, Dutch Bros management expects to open at least 160 new shops around the country, putting the total store count at around 1,000. While this may seem like a lot, it is just scratching the surface of the national expansion opportunity for the Dutch Bros brand. For reference, Starbucks has around 17,000 locations in the country. This indicates that there is plenty of room for Dutch Bros to reach 4,000 or even 5,000 locations just in the United States, which should excite investors around the potential of Dutch Bros stock.



Dutch Bros' financial performance is also impressive. The company generated $1.28 billion in revenue in 2024, up 32.6% year over year. This growth is significant, especially when compared to Starbucks, which has been struggling with comparable-store sales growth being negative for four straight quarters. Dutch Bros' same-store sales growth was 6.9% in Q4, on top of 5% growth in 2023, and it had transaction growth of 2.3% in the quarter, its highest quarterly growth in the last two years. This acceleration in growth is a stark contrast to Starbucks' performance.

However, Dutch Bros is not without its risks and challenges. One of the primary concerns is the intense competition in the coffee market, particularly from established giants like Starbucks. Starbucks has a significantly larger footprint with around 17,000 locations in the United States, compared to Dutch Bros's 831 locations. This disparity in market presence could pose a challenge as Dutch Bros continues to expand. However, Dutch Bros has shown resilience and growth, with a 32.6% year-over-year revenue increase in 2024 and a 6.9% same-store sales growth in Q4 2024. This indicates that the company is successfully attracting customers and gaining market share despite the competition.

Another potential risk is the company's reliance on a drive-thru stand concept, which, while popular, may not appeal to all customers. The drive-thru model is designed to be fun, enjoyable, and quick, but it may not cater to those who prefer a sit-down experience or a more traditional coffee shop atmosphere. Dutch Bros has addressed this by focusing on its popular drinks such as blended coffees and energy mixes, which are particularly appealing to younger customers. This strategy has helped the company build a loyal customer base and differentiate itself from competitors.

Additionally, Dutch Bros's rapid expansion could lead to operational challenges, such as maintaining consistent quality and service across all locations. The company has been able to achieve 30% profit margins at the restaurant level, which suggests efficient operations. However, as the number of locations increases, ensuring that each store meets the same high standards could become more difficult. Dutch Bros is addressing this by continuing to focus on its core strengths, such as its drive-thru concept and popular drinks, while also expanding its menu and offerings to appeal to a broader range of customers.

Finally, Dutch Bros's financial performance, while impressive, shows some areas for improvement. The company's return on equity (ROE) and return on assets (ROA) are below industry averages, indicating potential challenges in efficiently utilizing equity capital and assets. Dutch Bros has a debt-to-equity ratio of 1.78, which is below the industry average and reflects a more conservative financial approach. This suggests that the company is managing its debt responsibly and is in a strong financial position to support its expansion plans. However, as the company continues to grow, it will need to address these financial metrics to ensure long-term sustainability and profitability.

In conclusion, Dutch Bros Inc. (BROS) is a compelling growth stock under $100 with a strong business model, impressive financial performance, and significant expansion opportunities. While there are risks and challenges to consider, the company's resilience and growth potential make it a strong candidate for investors looking for the next big growth story in the coffee industry.