Having just earned a spot on Investor's Business Daily's Breakout Stocks Index, Dutch Bros has now served up three reasons for investors to keep an eye on the coffee shop chain. The fact that Dutch Bros stock continues to percolate two distinct buy points is just the start.
The Oregon-based company, a 2021 IPO, has also landed on multiple IBD stock lists, boosted by solid growth and strong institutional demand. So, as Dutch Bros sets up after fizzling out earlier this year, here are signs that shares may be getting ready to pop.
1. Dutch Bros Keeps Fueling Growth
Founded in 1992 by brothers Dane and Travis Boersma, Dutch Bros has grown to more than 1,000 locations across 18 states. The company offers a wide variety of unique, customizable cold and hot beverages, ranging from Dutch Faves to Dutch Bros Rebel drinks. Last month, it launched a lineup of seasonal fizzy concoctions, including the Dino Egg Fizz and Blue Lagoon Fizz.
Over the last three quarters, Dutch Bros has posted average earnings growth of 55.8%, including a 37% gain to 26 cents per share in the second quarter. That result sparked a nearly 22% one-day pop in the stock.
Revenue gains have ranged from 28% to 35% over the last three quarters.
For the third quarter, analysts expect 23% sales growth to $414.5 million. Earnings forecasts call for 6% growth to 17 cents per share before strengthening to a 50% gain to 11 cents per share in the fourth quarter.
For the full year, Wall Street sees 37% earnings growth to 67 cents per share, followed by a 30% gain to 87 cents per share in 2026.
See Who Joins Dutch Bros On The IBD Breakout Stocks Index
2. In Demand And Featured On 2 Elite Stock Screens
With a 96 Composite Rating out of a highest-possible 99, Dutch Bros ranks No. 1 among restaurant stocks.
Showing it's in good company with other top growth stocks, Dutch Bros joins artificial intelligence juggernauts Nvidia and Palantir Technologies on the IBD 50 and IBD Sector Leaders, our most stringent stock screen.
Dutch Bros stock has seen eight quarters of rising fund ownership and has as B- Accumulation/Distribution Rating and 1.2 up/down volume ratio. Pointing to quality institutional demand, 47 funds with an A+ rating from IBD have a position in the stock.
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3. Dutch Bros Stock Eyes Two Buy Points
After notching a 52-week high in February, Dutch Bros stock lost some of its fizzle, retreating below its 10-week moving average and even testing support at its 40-week line.
The stock then managed to form and break out of a cup with handle in June, but quickly pulled back. The current setup is a third-stage consolidation. The buy point is 77.88.
But with Dutch Bros back above its 50-day line following its Aug. 6 earnings report, the stock also offers an earlier trendline entry around 72.
While the relative strength line was on a downward slope from May to most of July, it has perked up in recent weeks.
Given the stock's volatility in recent months, investors should keep in mind the principles of risk management. So, with Dutch Bros stock potentially on the menu, stay profitable and protected by following sound rules for how to buy stocks and when to sell.
On Wednesday, the stock slipped just under 2% but came off the day's lows. It remains above its 50-day line.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
