Two Outstanding Shares Worth Hanging Onto for the Next Two Decades
Building substantial wealth isn't just about investing in growth stocks, it's about staying focused on the company's performance rather than the stock's fluctuations. Even top-performing companies will experience downturns during market corrections, but consistently purchasing shares in growing businesses over an extended period can yield impressive long-term returns.
Today, I've got two such companies with promising potential for your portfolio:
1. Dutch Bros
The restaurant industry is a goldmine for discovering simple companies that can generate substantial returns over time. Dutch Bros, the beverage chain that started in 1992 as a pushcart espresso seller in Oregon, is shaping up to be the next big player. After growing to 950 shops across 18 states, the company's 2023 trailing-12-month revenue reached $1.1 billion.
Dutch Bros' menu expansion beyond coffee to include lemonades, teas, smoothies, and energy drinks, as well as its experimentation with food offerings in select shops, could help spread brand awareness and expand its market potential. Moreover, its solid financial performance, with revenue consistently rising, and net income growth, is proof of its scaling capabilities and potential to increase margins.
The stock performed well following its 2023 third-quarter earnings results, yet it still trades at a reasonable price-to-sales multiple, making it an appealing long-term investment for the next 20 years.
2. Toast
Toast is another promising early-stage investment opportunity within the restaurant industry. This software-as-a-service (SaaS) company delivers an intuitive platform designed to cater to the complex needs of restaurant operators, and it has gained traction, even in challenging business environments for software spending.
Despite its impressive 26% revenue growth in Q3 2024, Toast maintains a fair price-to-sales multiple. The company continues to release features, like an app creation tool for smaller restaurant operators, aims to expand internationally, and grow its retail presence. As its scale increases, so does its profitability, with net income surging in Q3 2024.
With impressive growth rates, a substantial market presence, and opportunities for further expansion, Toast is a strong contender for your investment portfolio.
Enrichment Data
Dutch Bros:1. Revenue Growth: Dutch Bros reported a 34.9% YoY increase in total revenues to $342.8 million in Q4 2024, with company-operated shop revenues growing 38.2%.2. Gross Profit and Margin: Company-operated shop gross profit was $67.3 million, with a gross margin of 21.4%.3. Full-Year 2024 Results: Total revenues for 2024 grew 32.6% to $1.28 billion, with company-operated shop revenues increasing 35.9%.4. EBITDA: Dutch Bros' 2024 adjusted EBITDA was $230 million, up 44% YoY.
Toast:1. Revenue Growth: Toast reported a 26% increase in sales in Q3 2024 with annualized recurring revenue up 28%.2. EBITDA Margin: Toast's EBITDA margin was 26% in 2024, with management estimating it could reach 30%-plus within a couple of years.3. Market Opportunity: Toast has a vast opportunity in the US, with more than 875,000 locations, and further potential in other food and beverage retailers.
- Investing in Dutch Bros' shares could provide substantial returns over time, considering the company's impressive revenue growth and expanding market potential.
- If you're looking to invest in the tech sector, Toast's stock is an attractive option due to its fair price-to-sales multiple and substantial opportunities for growth.
- Managing your finance wisely during the early stages of a company's development, such as Toast, can yield impressive long-term returns when they enter growth stages and experience increased profitability.
- Dutch Bros' founding as a pushcart espresso seller illustrates that even the simplest businesses have the potential to generate substantial wealth with focused investment strategies and consistent performance over time.
