No Major Troubles For Big Tech Companies

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, No Major Troubles For Big Tech Companies So far, there has been no major trouble with Big Tech companies. Amazon crushed the estimates in its earnings report yesterday – with the EPS coming in at 94 cents per share versus just 58 cents per share expected. Revenue also topped expectations. Its ever-important Amazon Web Services came in slightly lower than expected at $23.1 billion vs. $23.2 billion expected. Lastly, Amazon’s sales forecast will be at $163.5 billion at the mid-point of its guidance range. That was lower than what analysts expected at $166.6 billion. All in all, Amazon (and other Big Tech companies) did well in the recent quarter. But there are some signs of a slowdown with their guidance for the next quarter. (Photo: David Becker/AFP/ Getty Images) That aligned with the recent release of US’s GDP growth. The data showed the US economy grew at an annualized rate of 4.9% in the third quarter. That was the fastest pace in nearly two years. Consumer spending was red-hot for the quarter. Inflation has slowed down, as well. Meaning? The economy grew at a robust pace, while inflation kept falling. Treasury Secretary Janet Yellen believes that the strong economic growth will be enough to keep rates “stay higher for longer.” - “The economy is continuing to show tremendous robustness and that suggests that interest rates are likely to stay higher for longer,” said Treasury Secretary Janet Yellen. Treasury Secretary Janet Yellen (Photo: REUTERS/Jonathan Ernst) The strong economic data sent the S&P 500 lower yesterday. The index is down by nearly 10% from its July peak, veering closer to the correction territory. Treasury two-year yields fell by eight basis points to 5.04%. Swap contracts now assign a 32% chance of one more Fed hike in the current rate-hiking cycle. Yields will play a big role in stocks from now on. Lower bond yields generally mean higher stock prices. But a survey by 22V Research reveals that 71% of the investors polled believe the 10-year yield will keep increasing to a median expectation of a 5.5% peak. - “The stock market isn’t ready to rally until bond yields are sharply lower, which probably won’t happen until we see inflation a lot closer to the Fed’s target,” said Edward Moya, senior market analyst for the Americas at Oanda.  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. In fact, Dutch Bros makes more money per restaurant than these restaurants: - Starbucks ($0.9m) - Subway ($0.49m) - Wendy’s ($1.8m) - Domino’s ($1.3m) - Pizza Hut ($0.98m) - Wingstop ($1.46m) - Burger King ($1.39m) - Taco Bell ($1.6m) Dutch Bros makes $1.9 million per unit which is almost 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. In fact, its total shop count exploded from 572 in the first quarter of 2022 to 754 in the second quarter of 2023. (Source: Dutch Bros) Dutch Bros expects to open at least 150 new locations in fiscal year 2023. (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 six 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 $4.4 billion. Starbucks is trading at a multiple of 3.8x market cap to revenue. - Formula: Starbucks has a market cap of about $106 billion and a FY 2022 revenue of $32 billion. You divide the number. You get 3.3x multiple. Using the same 3.3x multiple, Dutch Bros’ market cap would add up to $26 billion. How? You multiply $8 billion revenue by Starbucks’ 3.3x multiple. Well, my dear reader. That implies 5.9 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.