Two High-octane Growth Stocks Outperforming the Market Significantly
The S&P 500 is ascending this year, with a rise of nearly 24% approaching the year's end in 2024.
There's a strong market push, but there's also worry that stock prices are overvalued, and the market might tumble. In truth, it's similar to any other period. Nobody possesses absolute certainty regarding the market's trajectory. Therefore, it's crucial to remain prepared for fluctuations, such as rises, falls, stagnancy, and surprise occurrences with a varied portfolio, encompassing stable securities.
Keep your focus on the goal – long-term investing entails considering a stock's potential in five, ten, or even twenty years in the future and disregarding brief events. If you can achieve this, you'll uncover some impressive stocks for purchasing.
Dutch Bros (BROS 1.35%) and On Holding (ONON 5.65%) are two outstanding growth stocks outperforming the market today and capable of propelling your portfolio over the next few years.
1. Dutch Bros: The fresh face in coffee shops
Dutch Bros is a small coffee shop chain predominantly located along the U.S. West Coast but rapidly expanding nationwide and won't remain small for long. Over its stock market tenure, it's exhibited robust growth and is opening stores at a rapid pace. Furthermore, it's becoming sustainably profitable while rewarding shareholders committed to long-term investment.
Investment communities have debated Dutch Bros, but the foundations of a prosperous business are strengthening. It all commences with a top-notch product, and Dutch Bros' enthusiasts are captivated by its coffee, service, and culture. It boasts a distinct image and brand presence, and its new store launch team meticulously implements its successful formula in each new establishment. As of the conclusion of the third quarter, it has 950 stores in 18 states, aiming to reach as many as 4,000 stores across the next 10 to 15 years.
Despite the daunting microenvironment, Dutch Bros has reported double-digit sales growth and increasing earnings. In the 2024 third quarter, sales increased 28% year over year, and same-store sales rose 2.7%. This performance may not be noteworthy in absolute terms, but it constituted a positive outcome under the circumstances. Adjusted earnings per share (EPS) were $0.16, surpassing Wall Street's projections.
It appears that the only direction is upward. Do not expect linear progress, and the stock may fluctuate according to quarterly reports. Nevertheless, Dutch Bros stock is dominating the market currently, up 54% year to date, and I expect this trend to continue.
2. On Holding: Challenging the titans in footwear
Entering an industry already ruled by a few significant players is no easy feat, but On is establishing a robust brand as the zenith of running shoes. Its shoes boast a distinctive, recognizable sole, delighting loyal customers. On is capitalizing on its popularity to introduce new shoe models and an entire apparel line.
Recently, it unveiled an innovation named LightSpray, which employs a robotic arm to spray a shoe onto a mold in a three-minute process. This is simply the latest example of how this small Swiss company is disrupting the athletic footwear market and garnering attention.
The figures speak for themselves. Third-quarter sales jumped 32% year over year, fueled by a 50% increase in direct-to-consumer sales. This illustrates how On is resonating with its clientele and forging connections. It also helps bolster the industry's highest gross margin, which expanded to 60.6% in the third quarter. The gross margin is enhanced further by On's premium positioning, and it boasts a high full-price sales rate.
Customers are prepared to pay for On's products, and its affluent and resilient customer base is continuing to pay, regardless of inflation.
On has merely begun its journey. It has scarcely entered many markets, even affluent ones with ample sales potential. According to last year's investor meeting, it had only achieved 47% brand penetration in its native Switzerland, and this figure was significantly lower in many U.S. cities. However, management announced that brand recognition has skyrocketed since its showing at the Paris Olympics and a partnership with celebrity endorser Zendaya.
On stock has surged 96% this year, but there is still time to purchase this market-outperforming stock.
- Given the current market volatility, it's essential to allocate a portion of your finance for investing in stocks like Dutch Bros, considering their potential growth in the long term.
- As you consider your investment strategy, you might want to consider companies like On, which is challenging the giants in the footwear industry, demonstrating impressive sales growth and a strong brand recognition, thus promising good financial returns.
