Three Relentless Shares that Might Outperform the S&P 500 by 2030
The booming market persistently elevated the S&P 500 to unprecedented heights this year. This period is still a prime opportunity to invest as a bull market typically persists for several consecutive years once it gains momentum.
Three independent analysts from our platform envision Dutch Bros (BROS 3.33%), MercadoLibre (MELI 3.26%), and Sweetgreen (SG 1.06%) surpassing the S&P 500's average return of 10% over the past several decades. These firms exhibit exceptional growth potential, which could potentially grant superior returns.
An emergent stock that may become a home-run
*John Ballard* (Dutch Bros): Investing in burgeoning food establishments can serve as a lucrative strategy in the stock market. Dutch Bros originated as a coffee shop but has subsequently broadened its menu to include various beverages such as smoothies and energy drinks. The company's profit-driven expansion across the U.S. could spearhead remarkable returns over the next five years.
Despite a challenging consumer spending environment, Dutch Bros remains unaffected by these challenges and is adhering to its growth strategy. Revenue incremented by 28% year-over-year in the last quarter, with a 2.7% increase in same-shop sales. This performance suggests that the company's offering is gaining traction among customers and fostering repeat purchases akin to other prominent beverage chains like Starbucks.
Dutch Bros has reported around 30% or better revenue growth in the past few years. However, the stock's growth has lagged behind due to profitability concerns. Nevertheless, Dutch Bros is performing exceptionally well for a small restaurant business. Quarterly net income swelled by 62% year-over-year to reach $22 million in Q3.
Dutch Bros possesses ample room for expansion. As of the latest quarter, it operated only 950 outlets in 18 states. Following the company's Q3 financial results, its stock soared, indicating that it's not too late to seize this opportunity. The company's extensive growth potential can still generate substantial returns in the long term.
The dominant e-commerce and fintech giant
*Jennifer Saibil* (MercadoLibre): Over the prior five years, MercadoLibre has considerably outperformed the market with a 267% surge, even following a recent decline, and it has a solid chance of achieving this feat once more over the next five years.
The platform is the leading e-commerce service provider in Latin America, serving a vast population of over 500 million individuals, akin to the extent Amazon serves in the U.S. Customers increasingly depend on it for their shopping requirements with growing engagement, as indicated by customers who made purchases in three or more categories more than quadrupling between 2019 and 2023, and average quarterly number of products per consumer rising from 4.4 to 7.1.
The company boasts high rates of next-day and two-day shipping, and as more vendors integrate into its logistics network, it continues to benefit from a financially beneficial flywheel effect as more customers join, more suppliers join, and revenue escalates. Latin America has yet to reach its full potential in e-commerce, which in turn propels MercadoLibre's rapid growth while also preserving an extended growth runway.
Beyond its successful e-commerce business, MercadoLibre also hosts an efficacious fintech division, which has experienced exponential growth. Initially conceived as a solution for underbanked clients to make purchases, it has evolved into a comprehensive financial services application, featuring credit cards, digital payments, investing tools, and more. Its strong credit business is backed by its extensive data archives, resulting in effective risk management and minimal costs. The platform is currently the leading fintech entity in three out of its four primary regions in terms of monthly active users, which continue to rise, and as it expands its user base, it ultimately benefits from lower churn rates, increased engagement, and reduced credit risk.
MercadoLibre consistently enhances its operations and engages in the development of new segments and services, such as a flourishing advertisement business and an e-commerce membership program, both akin to Amazon.
Despite its existing success, MercadoLibre is still brimming with vast long-term prospects and may persistently surpass the market over the subsequent five years and beyond.
A restaurant stock that may break out
*Jeremy Bowman* (Sweetgreen): Not every restaurant stock embodies the magic of Chipotle Mexican Grill, but Sweetgreen is one of the more captivating restaurant stocks to emerge in recent times.
It is the country's largest fast-casual salad chain providing a distinctive twist to the popular fast-casual model, as demonstrated by its average unit volumes, which rank among the top in the industry and underscore its popular appeal.
In the second quarter, same-store sales skyrocketed by 9%, reflecting the company's growing momentum, and it has substantial potential for expansion with only about 225 locations presently.
However, the primary reason for the stock's prospective ability to surpass the S&P 500 by 2030 is its adoption of technology, specifically Infinite Kitchen, its robotic food preparation system that increases throughput, boosts the company's average ticket, and enhances margins. The company is gradually implementing this technology to additional restaurants, and it has the potential to be a game-changer in the long term as it expands nationwide with plans to reach 1,000 restaurants by the end of the decade.
Due to its substantial sales per item, Infinite Kitchen might further boost the profit margin, as the company currently operates at a loss based on standard accounting practices (GAAP). But its financial situation is progressing, and if it manages to boost its earnings to align with well-established fast-casual eateries like Sweetgreen, the stock value is predicted to skyrocket throughout the next decade.
Investing in Dutch Bros could potentially yield high returns due to its profit-driven expansion and strong financial performance. The company's revenue grew by 28% year-over-year in the last quarter and its net income surged by 62% in Q3, indicating its growth potential.
MercadoLibre, the dominant e-commerce and fintech giant in Latin America, has consistently outperformed the market with a 267% surge over the past five years. The company's solid fintech division, which includes credit cards, digital payments, and investing tools, has experienced exponential growth and serves as a basis for its long-term prospects.
