The year 2022 was a lousy one for the stock market. But so far in 2023, market performance has been MUCH better. One company worth looking at for the second half of the year is Dutch Bros (BROS), notes John Divine, editor of US News & World Report.
Even after factoring in dividends, the S&P 500 fell 19.4% in 2022, while the tech-heavy Nasdaq composite took a 33.1% haircut. The catalysts behind Wall Street's sell-off are all too familiar: Inflation, soaring interest rates, persistent recession fears and the Russia-Ukraine war snowballed into an avalanche of worries that investors couldn't ignore, and many previously high-flying stocks took a beating as the “risk off” mindset came to dominate markets.
This, thankfully, provided a window of opportunity for investors to snap up great companies at a discount entering the new year. And while massive, established companies like Apple (AAPL) can offer investors some stability, smaller companies have more room for expansion and can boost portfolios.
Enter the rapidly expanding coffee chain Dutch Bros, which for comparison's sake, is roughly 0.2% the size of Apple despite being worth about $4.7 billion. Revenue grew like a weed in 2022, surging 48.4%. With initial roots on the West Coast, Dutch Bros locations are almost entirely in the West and Southwest, with 716 locations in 14 states through the end of March.
The small footprint of its drive-thru stores means they are relatively cheap to open, allowing for faster expansion. That shows up in the numbers: Dutch Bros opened 133 new stores in 2022, which works out to location growth of 25%.
While the company's stock got off to a hot start in 2023, shares sank in early May after a quarterly earnings report that fell below analysts' expectations. Shares are up less than 1% this year through June 30, giving you an opportunity to add at better prices.
Recommended Action: Buy BROS.
