Stocks Notched Another Winning Day

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Stocks Notched Another Winning Day Stocks remain unstoppable, as the S&P 500 pulled off its longest streak of monthly gains since August 2021. The string of strong economic data (along with improving inflation) took down bears one by one. Morgan Stanley’s Michael Wilson surrendered his bearish view and saw the rally running further. Citigroup’s Scott Chronert also revised his negative views on stocks by raising his forecast for the S&P 500 this year. - “The challenges companies have endured – stubborn inflation, weak markets, and sluggishness internationally – are no longer headwinds,” said Mark Hackett at Nationwide. - “Now, we’re not only seeing tailwinds heading into 2024, but we’re getting less disruptive reactions in the stock market following earnings reports.” Tightening credit conditions: The Federal Reserve released its survey of lending officers, and it revealed tighter standards and weak demand for loans in the second quarter. On a related news about the central bank, Fed Bank of Chicago President Austan Goolsbee called the recent inflation reading a “fabulous news” but said that he hasn’t decided whether to pause rate hikes at the next policy meeting. During the weekend, his Minneapolis counterpart Neel Kashkari said the inflation outlook is “quite positive” but warned that rate hikes would lead to some job losses and slower growth. Can the rally continue? Independent Advisor Alliance’s Chris Zaccarelli believes that the next leg of the rally could hinge on the upcoming earnings reports from Amazon and Apple, saying that they could “set the tone” for the rest of the market. - “If they give really good guidance, we could see this bull market really continue to pick up speed and even see some momentum heading into the fall,” said Independent Advisor Alliance’s Chris Zaccarelli. What’s next? Besides key earnings reports from these two Big Tech companies, we will receive a new jobs report on Friday. Economists expect 200,000 added jobs in July versus 209,000 in June. That would show a slightly weaker labor market. It is tough to tell how Wall Street would react to a positive or negative job report. A positive report could bolster the case for a soft landing but could spark worries about extra rate hikes. A negative one could mean the central bank might pause its rate-hiking cycle but wouldn’t be good for stocks with lofty valuations.  Top Growth Stock To Buy Right Now There is an unusual restaurant in Oregon that fostered a cult-like following. Drive-thru lanes are nearly always jam-packed – far longer than McDonald’s. They were everywhere in popular plazas. And here are two unique things about this restaurant: (1) the restaurant is tiny, and (2) an employee would walk outside and take orders from each car. This is a brilliant idea. McDonald’s would have you order through a machine. You drive to the next window and pay for your food. Finally, you drive to the final window to pick up your orders. This restaurant is different. Its name is Dutch Bros. Today’s Stock Pick: Dutch Bros Inc. ([BROS]() A Dutch Bros employee (a “runner”) would walk outside and take orders from each car through its tablet. As a customer, you’d give your order to a real human while inside your car. You pay for the order to the same person. And finally, you drive up to the window to pick up your order. This type of human connection makes Dutch Bros immensely popular. (Photo: Noe Garcia) (Photo: Tom Tingle/The Republic) In fact, Dutch Bros makes more money per restaurant than these restaurants (based on early 2022 numbers): - Starbucks ($0.9m) - Subway ($0.42m) - Wendy’s ($1.6m) - Domino’s ($1m) - Pizza Hut ($0.9m) - Wingstop ($1.1m) - Burger King ($1.3m) - Taco Bell ($1.5m) Dutch Bros’ newer stores that were opened since 2018 makes about $2 million per unit which is two times more than Starbucks – the ultimate beverage-focused company: (Source: Dutch Bros) The beauty of focus: For now, they don’t sell food. Rather, they focus on beverages made with 10 ingredients or less. Their operations are so simple. They don’t have any lobby. They chose to focus on drive-thru only, which is unheard of in the restaurant world. (Photo: LoopNet) In other words, they eliminated the frills and focused on what matters for customers. Dutch Bros is in its infant stages, in terms of expansion. They operate in 14 states, and most states are still early in reaching the saturation point. Oregon (its founding state) has 155 restaurants. Texas, Arizona, Nevada, and Colorado still have under 100 restaurants. And of course, we have all other 36 states that Dutch Bros hasn’t entered. (Source: Dutch Bros) The company started slow and originally went down the franchise model. However, it decided that company-operated restaurants are the way to go. They no longer take franchisees, except those who already worked with the company. From 2011 to September 2021, Dutch Bros grew its total restaurants by 11% CAGR: (Source: Dutch Bros) The co-founder stepped back from the company and brought in experienced executives. And it’s time to accelerate growth. Since 2019, Dutch Bros expanded its shop count by 22% CAGR: (Source: Dutch Bros) Listen, the growth opportunity is endless. Dutch Bros named its mission, “Open New Shops Wherever People Want Great Beverages.” Well, guess where people want great beverages? Everywhere. We’ve got existing states that are far from hitting a saturation point. We have 36 more states to go. And heck, we have international markets, as well. So far, new states show that its popularity spreads all the way from Oregon to Texas. In fact, its average unit volume in new stores exceeded the company’s average: - “Numbers have shown the brand translates well across regions … In fact, our average unit volume in the most recent states we entered are well above our system average, and that is in spite of very little marketing in those markets,” said CEO Joth Ricci. Here’s the incredible thing. Dutch Bros only spent 2% of total sales on marketing, but about 77% of people in Dutch Bros’ existing markets know the brand: - “Word-of-mouth advocacy for our customers has been among the strongest drivers of brand awareness… Seventy-seven percent of people surveyed in our existing markets were aware of Dutch Bros, and yet marketing spend represented only 2% of total systemwide sales last year,” added CEO Joth Ricci. Should you be worried about Starbucks? Dutch Bros does not go fully head-to-head with Starbucks. Dutch Bros is known for its coffee, but it also offers popular drinks like its signature energy drink called Blue Rebel. Here’s the beverage breakdown by sales: - Coffee/Cold Brew: 48% - Blue Rebel (energy drink): 23% - Tea/Lemonade: 10% - Frost/Smoothie: 6% - Coca/Chai: 7% - Other: 6% So, Dutch Bros is far more than just a coffee shop. It’s a beverage restaurant. Plus, Dutch Bros has competed successfully alongside Starbucks in its home turf of Northwest. Dutch Bros is trading at an expensive valuation. Wall Street recognizes its immense potential since its P/S is about seven times. Yes, that’s expensive. But, let me paint you a picture of the future. The goal is to achieve 4,000 locations. Its average unit per volume (sales per location) is about $2 million. So, let’s multiply the number. With 4,000 locations at $2m per restaurant, the company will achieve $8 billion in revenue. Now, hold on to the number of $8 billion in revenue. Let’s look at the market cap. Dutch Bros has a market cap of about $5 billion. Starbucks is trading at a multiple of 3.8x market cap to revenue. - Formula: Starbucks has a market cap of about $120 billion and a FY 2022 revenue of $32 billion. You divide the number. You get 3.8x multiple. Using the same 3.8x multiple, Dutch Bros’ market cap would add up to $19 billion. How? You multiply $8 billion revenue by Starbucks’ 3.8x multiple. Well, my dear reader. That implies 5.3 times higher market cap than Dutch Bros’ current cap. The long-term upside is simply too lucrative to haggle about a company being somewhat pricey in the short term, don’t you agree? This company looks like a screaming buy. [CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS](       © All Rights Reserved, Trade Alliance If you no longer want to receive these messages, you may [click here]( to unsubscribe.