Does Dutch Bros (BROS) Have a Long Runway for Growth?

Baird Equity Asset Management, an investment management company, released its “Baird Mid Cap Growth Equity Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The strategy returned -8.9%, net of fees, in the second quarter, compared to the Russell Midcap Growth’s -3.2% decline. It was a challenging quarter due to portfolio positioning and ongoing benchmark factor headwinds, which negatively impacted the relative performance of the strategy in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Baird Mid Cap Growth Equity Strategy highlighted stocks like Dutch Bros Inc. (NYSE:BROS), in the second quarter 2024 investor letter. Dutch Bros Inc. (NYSE:BROS) operates and franchises drive-thru shops. The one-month return of Dutch Bros Inc. (NYSE:BROS) was 7.55%, and its shares gained 40.12% of their value over the last 52 weeks. On September 25, 2024, Dutch Bros Inc. (NYSE:BROS) stock closed at $32.70 per share with a market capitalization of $5.028 billion.

Baird Mid Cap Growth Equity Strategy stated the following regarding Dutch Bros Inc. (NYSE:BROS) in its Q2 2024 investor letter:

“Adjustments made to our consumer discretionary exposure include the addition of two new positions, Texas Roadhouse and Dutch Bros Inc. (NYSE:BROS)—both restaurants. Dutch Bros is a drive-thru beverage shop concept with West Coast origins generating very high returns on its stores and should have a long reinvestment runway under strong leadership.”

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A closeup of a customer tasting a freshly-made cold brew coffee product from the company’s shop.

Dutch Bros Inc. (NYSE:BROS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Dutch Bros Inc. (NYSE:BROS) at the end of the second quarter which was 33 in the previous quarter. In the second quarter, Dutch Bros Inc. (NYSE:BROS) generated $325 million in sales and $65 million in adjusted EBITDA, up 30% and 34%, respectively, over Q2 2023. While we acknowledge the potential of Dutch Bros Inc. (NYSE:BROS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Dutch Bros Inc. (NYSE:BROS) and shared NCG Small Cap Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.