I think one of the reasons using TBs works for me is that its usually only involving companies that I have High Confidence in and if it doesn’t work out quickly I am comfortable holding the extra shares.
And example of a company I have used a lot so far this year that fits the High Confidence qualification but is not on the roster has been MELI; although, if push came to shove I wouldn’t mind holding MELI longer term. Another company that I am currently looking at the same way - albeit with a little less confidence, is Dutch Brothers Coffee: BROS.
Now…to be sure, none of the High Growth, really smart kids/posters or services I track has mentioned BROS - ever - but, that doesn’t mean that there isn’t a lot to like there.
Dutch Brothers - Drive Thru Aspiring Coffee King who is just getting started.
Here is what BROS says about BROS:
“…is a high growth operator and franchisor of drive-thru shops that focus on serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE.” Note: after reading some of their reviews I think the good folks at BROS mean it.
Currently they have just 538 locations (As of the end of 2021) in just 12 states with wide-eyed and bushy tailed expansion ambitions. They are opening additional shops every QtR. I read somewhere that they think they top out at 4000 locations nation wide and that isn’t even considering International potential.
A Few Data Points:
The company had its public debut in mid September 2021 at $36.68. It then stumbled around a bit just like a new born dear before getting its trading legs together and thereafter it spiked to just above $81. That has been its high water mark.
Current Price: $44.22
Range: $32.42 - 81.40
About 45.6% Below its High
Market Cap: 7.23B
BROS first ER as a public company was for FQ3 2021 way back on November 10th, 2021. The report featured A Beats on both EPS and Revenue with Revenue Growth of 49.8%. During the QTR they opened 33 new locations and same store sales increased 7.3%. You can check out that report here:
The company’s second ER was today and featured a Miss of 1 Cent on Non-GAAP EPS and a Beat on Revenue by 4%. Revenue Growth Accelerated to 55.8$. Sequentially Revenue grew 7.9% with same location sales up just over 10%. Press Release and CC Transcript here:
The company guidance for 2022 was $700 -715M representing 43% growth. Additionally, the company committed to open 125 new locations in 2022.
During the day the stock traded down 6.94% to $44.32.
Ok so here is the thing - BROS ain’t no UPST, MNDY or ZS. Compared to those speedy growth demons its sloth if not a turtle. But Revenue Growth accelerating from 49.8% to just over 55% quarter over quarter ain’t nothing to sneeze at. Moreover, had the company expenses been impacted by $3M or so from going public there bottom line would have looked just dandy. Just dandy - more or less. The point here is that Dutch BROS has more than a decade of growth left in it.
So the long term growth story is a sort of foundational support for the share price regardless of what happens in the next day or so. Does the company have a few warts - why of course it does with the main one being that as an IPO its gonna perhaps be erratic. So what? The Fool says they only recommend stocks that we need to hold for 5 years: thats a lifetime in my system; however, I think BROS is not only a good bet but a safe one as well. Well…as safe as any stock can be in its field. Besides, I haven’t lost any money on a coffee company in months. So…
If BROS sheds another couple of bucks I am going to initiate a position that is intended to be short term - which, if it thens goes wrong - could be a longer term position. Either way, I am interested in it’s story. We’ll see.
All the Best,