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Investors looking for stocks in the Retail - Restaurants sector might want to consider either BJ's Restaurants (BJRI) or Dutch Bros (BROS). But which of these two stocks presents investors with the better value opportunity right now?
Dutch Bros' (BROS 3.01%) stock price has roughly doubled over the past year. Given the growth that the coffee chain has achieved, that's perhaps not surprising.
Most investors know the stock market's long-term average annual return is in the ballpark of 10%. Most veteran investors understand that aggressive efforts to beat this average often result in you underperforming the average.
Dutch Bros has a strong brand identity, with a unique customer friendly model suggesting continued growth over the next decade. It has market leadership in suburban coffee chains, appealing to several demographics. The company is reasonably priced at 8x forward sales, growing at 24%.
People spend less on certain items when under economic stress. Presently, with inflation remaining stubbornly high, particularly for food items like eggs, consumers have been stretched.
Shares of Dutch Bros (BROS -3.56%) stock jumped 27% in February according to data provided by S&P Global Market Intelligence. It reported phenomenal fourth-quarter results, and the market is getting more excited about its opportunities.
Starbucks has been going through a rough patch. Comparable-store sales growth -- an important metric for restaurants that measures revenue growth from existing locations -- has been negative for four straight quarters.
Investors who can appreciate a good cup of joe should take a closer look at Dutch Bros (BROS 3.40%). Shares of the drive-through coffee shop operator and franchiser are piping hot, surging 160% over the past year.
BROS benefits from strong brand momentum, accelerated expansion and increasing customer engagement through mobile and loyalty programs.
As earnings season winds down, a notable trend has emerged in the markets: several mega-cap stocks have underperformed year-to-date (YTD). In contrast, several mid-to-large cap stocks with strong retail followings have delivered superior returns.