Although investors might gravitate to tech stocks hoping for outsize gains, many often overlook the growth in the consumer sector. Home Depot is one of the best-performing stocks in the history of the stock market, and more recently, consumer stocks such as Amazon have delivered enormous gains.
Today’s investors might want to find the next Home Depot or Amazon, but such discoveries remain elusive. Still, a few consumer stocks could turn a $1,000 investment into $5,000 or more by 2030. Those on the lookout for such stocks should consider Dutch Bros (NYSE: BROS) and Celsius Holdings (NASDAQ: CELH).
Dutch Bros
One obvious strategy is to look for a stock that could expand its customer base by fivefold in that time. Indeed, Dutch Bros could fit that description.
The specialty beverage company has stood out for its espresso and half-and-half-based Dutch Classics. It also sells teas, energy drinks, lemonades, smoothies, and other beverages.
It had 876 locations across 17 states as of the end of March. With its stated goal of having about 4,000 stores in the next 10 to 15 years, expansion alone should foster much of that fivefold growth in its share price.
Moreover, despite competition from Starbucks, smaller chains, and countless independents, Dutch Bros is likely gaining organically. In the first quarter of 2024, same-shop sales rose 10%.
Also, since it added 160 shops during the previous year, revenue in the first quarter grew by 40% from a year earlier to $275 million. The company kept a lid on expenses, resulting in $7 million in first-quarter net income, versus the $4 million loss in the year-ago quarter.
After a dramatic sell-off following its initial public offering, the stock is in recovery mode, rising 50% during the past year. With that, its 2.7 price-to-sales (P/S) ratio now exceeds Starbucks’ at 2.3.
But unlike Starbucks, Dutch Bros still has yet to cover much of the country. As it continues its expansion, it could take this coffee stock higher by fivefold or more in the process.
Celsius Holdings
Admittedly, an energy drink maker like Celsius Holdings might seem like a missed opportunity. The stock is up nearly 25,000% during the past 10 years, supercharged by a partnership with PepsiCo.
Revenue no longer grows by triple digits, and its market share has pulled back slightly, causing the beverage stock to fall in recent weeks. Given that change in sentiment, one might wonder if its rapid growth can continue.
But Celsius stands out among energy drinks by targeting health-conscious consumers. It emphasizes natural ingredients, avoiding high fructose corn syrup, aspartame, and artificial flavors or colors, and using guarana extract as its stimulant.
Growth also remains robust. Revenue in the first quarter was $356 million, up 36% yearly. Celsius also kept the cost of revenue growth in check, which helped first-quarter net income rise to $78 million, 89% more than a year earlier.
Analysts forecast a 28% revenue increase in 2024 and another 27% the year after. Although the revenue growth rate could slow gradually, total revenue should continue rising for the foreseeable future.
Lastly, despite a recent drop in the stock price, the price-to-sales (P/S) ratio of 9 is near multiyear lows. So it’s likely that once investors realize Celsius is going to remain a fast-growth company, the combination of rapid revenue increases and a comparatively low valuation should make a fivefold rise in the share price over the next six years achievable.
Should you invest $1,000 in Dutch Bros right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Celsius, Home Depot, and Starbucks. The Motley Fool has a disclosure policy.
2 Stocks That Could Turn $1,000 Into $5,000 by 2030 was originally published by The Motley Fool
