With investment being all the rave, the question of which stock to invest in is frequently followed by How to buy these stocks. Well, we assume you chose to dive into Dutch bros stocks which is why you are here to find out how.
Well, we are glad to inform you you have come to the right place.
In this post, we will not only give you detailed step-by-step instructions on how to buy dutch bros stocks but also give you some tips you would need to know before you delve into Dutch bros stocks. We will discuss the advantages and disadvantages of investing in Dutch bros stocks and if it is a good time to invest in them.
Not to forget some extra tips on points to note before investing in Dutch bros. Stocks. So without any further ado, let’s tell you how to buy dutch bros. stocks
Overview of Dutch Bros
Dane Boersma, a third-generation dairy farmer in Grants Pass, and his twenty-one-year-old brother Travis Boersma decided to buy a double-head espresso machine and experiment with a hundred pounds of coffee in their vacant milk building in 1992.
After handing out free samples of flavored coffee to friends and family for a month, the couple set up shop in their southern Oregon town with a mobile espresso pushcart.
Their firm was called Dutch Brothers’ Coffee Company, or Dutch Bros.
The Boersma brothers’ enterprise grew quickly as a flavored-coffee craze spread through Grants Pass and the surrounding areas. They worked with local suppliers to assure product quality and dedication to the “Dutch Creed” (the Optimist’s Creed) on which they created their business: to be optimistic and embrace life to the fullest, “to think only the best, work only for the best, and expect only the best.”
Dutch Bros. roasts its coffee and specializes in drive-through coffee cafes. The firm is the country’s largest privately held drive-through coffee chain and now exclusively offers franchising options to existing franchises and current workers.
As of January 2012, 172 Dutch Bros franchises were locally owned and operated in Oregon, California, Washington, Idaho, Nevada, Colorado, and Arizona.
Dane Boersma died of Lou Gehrig’s disease in October 2009. In his honor, all locations contribute one day’s revenue to the Muscular Dystrophy Association each year (MDA). Over $110,000 was contributed to MDA in 2010 for research and family services. The firm also participates in an annual “Buck for Kids Day,” with a portion of the revenues benefiting local charity groups.
In 2011, approximately $93,000 was raised for this cause, furthering the Dutch Bros. slogan of “making a difference, one cup at a time.” In addition to particular charities, each retail store invests over $1,000,000 (1 percent of total sales) in the community each year.
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Advantages of investing in Dutch Bros
Before we show you how to buy Dutch bros stocks, let’s look at some of the advantages of owning Dutch bros stocks. It’s always risky to declare something “the next one,” but here are three reasons why Dutch Bros has the potential to be a major winner in the long run.
Next-generation consumer branding
Dutch Bros uses a similar strategy to Starbucks to generate consumer loyalty by establishing a brand that connects with its target demographic. The firm targets young consumers who are unlikely to remain loyal to established brands, luring them with beverages like Iced Tiger’s Blood Lemonade or Iced Electric Berry Rebel, which feature caffeine, colorful names, and a similarly striking appearance.
Dutch Bros debuted its mobile app in early 2021 and has 2.3 million active accounts. Starbucks has amassed over 26 million members since the program’s inception in 2008. Nonetheless, the firm’s excellent pace is positive for a company attempting to establish itself against one of the most prominent consumer brands in the United States.
The company’s drive-thru business strategy aided its performance during the pandemic, with same-store sales increasing 7.3 percent year over year (YOY) in Q3 2021. Same-store sales will be an important sign of its brand momentum within its client base, and investors will want to monitor this in the future.
Because Dutch Bros is continuously expanding sites, overall sales growth should stay robust. Total revenue increased by 50% year on year to $130 million in the third quarter. This advantage would get you really excited about how to buy Dutch Bros stocks.
Long-term Store Count Expansion
Dutch Bros now has 503 sites spread over a few Western and Southern states. However, the company’s long-term expansion plans call for 4,000 outlets across the country, which could fuel years of double-digit revenue growth.
The firm established 33 new stores in the third quarter and expects to build at least 112 in 2022. Dutch Bros has franchised and company-operated locations, but is shifting toward the latter; it controls 30 of the 33 stores that opened during the third quarter. According to management, running its stores allows it to recoup its investment much faster.
If investors assume the firm opens 100 new stores each year on average, the current growth objective may see new stores drive company-wide growth for the next few decades. Store growth may pick up as Dutch Bros expands and its cash flow improves.
The Primary Business is already Lucrative
Growing businesses sometimes lose money in their early years as they actively spend on funding expansion. Dutch Bros’ business approach appears to be already lucrative.
In the third quarter of 2021, the company’s net income was a negative $117 million, however, this was because of stock-based compensation of $124.8 million associated with the company’s first public offering (IPO). In the three quarters before the IPO, adjusted net income was $11 million positive.
The business invests an average of $1.35 million on each location. Depending on the lease arrangement, it recoups anywhere from 35% to 75% of its financial investment in the first two years of operation. When Dutch Bros builds stores, the payback period is quite short, implying the firm earns greater cash flow over time as these extra sites become successful.
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Disadvantages of investing in Dutch Bros
For everything with advantages must also have disadvantages. We felt its right to let you in on the disadvantage of investing in Dutch bros stock before giving you a guide on how to buy Dutch bros stocks.
Inflation has been a problem for Dutch Bros. Even as it expands its presence, increased costs have reduced the amount of money available in the family budget for coffee runs.
This was revealed in the company’s earnings report. Sales increased 54 percent year on year to $152 million. However, sales costs increased by 82%, resulting in quarterly losses of $16.3 million vs $4.8 million in the first quarter of 2021.
Dutch Bros maintained its sales outlook for 2022 at $700 million to $715 million. However, at the Q1 2022 results call, management revealed that sales growth had stalled due to increased gasoline prices.
This and other issues caused shares to fall by 26% in the next trading session, sending Dutch Bros below the IPO price from last September. Inflation’s impacts are not restricted to the corporation.
Most equities have fallen recently, and Dutch Bros has not been spared. It is available at an almost 60% discount from its October peak.
Investors should also note the fact that Dutch Bros trades at 3.1 times revenues. This is not considerably higher than Starbucks’ 2.9 times revenue multiple, thus its stock does not stand out in terms of value.
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Is Dutch Bros a good Stock to Buy?
Before we talk about how to buy Dutch bros. Stocks, let’s take a moment and consider if dutch bros. Is a good stock to buy now.
The company, which debuted at an IPO price of roughly $23 and closed at $53 on its first trading day, has proven popular with investors. Shares have fluctuated since then, but have resisted giving up the company’s IPO momentum.
In comparison to Starbucks, the stock’s value appears to be reasonable. Dutch Bros has a forward price-to-sales ratio of four, whilst Starbucks has a multiple of 3.4.
Keep in mind that Dutch Bros is far smaller than Starbucks and is gaining sales much quicker. Investors may argue that Starbucks’ stock should be valued higher because of its powerful and well-established brand and its continued expansion.
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Still, if you’re looking for a long-term investment, I believe Dutch Bros is tiny enough to overcome valuation difficulties. The company’s market capitalization is little more than $9 billion.
With many growth levers such as store traffic, new locations, and price, Dutch Bros has the elements to thrive if execution is strong and customers continue to love what it has to offer.
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How to buy the Dutch Bros Stock
Despite the many benefits of the BROS stock launch, it is not without its drawbacks. On a commercial level, Dutch Bros’ blue-chip competitors have the financial wherewithal to hinder the company’s growth trajectory, especially if it expands into higher-traffic locations.
Administratively, BROS shares will be listed on the stock exchange customarily. As a result, most investors must buy shares in the open market, which may be risky because of the possibility of an IPO pop.
However, not all items are certain to drive higher right away. So below, we have given a set-by-set guide on how to buy Dutch Bros stocks. Also, purchasing on launch day is simple if you already know how to buy stocks. If you don’t, follow the easy instructions below.
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Step 1: Pick a brokerage
The first step to buying dutch bros stock is to pick a brokerage. If you’re ready to up your IPO game, limit your search to platforms that give access to pre-IPO shares or equity units at their first offering price.
New issues are extremely volatile no matter what industry an IPO is associated with. To reduce this uncertainty, select a balanced share count that will allow for acceptable rewards but not destroy your portfolio if your thesis fails.
Step 3: Choose your order type
One of the important steps in how to buy Dutch Bros stocks is to choose your order type. Before you place your first order, familiarize yourself with the following market ideas.
- Bid: The highest bid for a stock made by a buyer.
- Ask: The seller’s lowest acceptable price.
- Spread: The spread, or the difference between the bid and ask price, also shows market liquidity and risk, with narrower spreads suggesting a high-volume, low-risk market and wider spreads showing the opposite situation.
- Limit order: Limit orders give transparency but no execution assurances for buy or sell requests at a preset price.
- Market order: Market orders ensure delivery, but only at the current rate, which varies continually.
- Stop-loss order: A stop-loss order is a defensive mechanism that immediately leaves your position at a preset price or below.
- Stop-limit order: Stop limits are like stop losses because they only execute (exit) at a set price. However, these orders have the same non-fulfillment risk as limit orders.
Step 4: Execute your trade
The final step on how to buy Dutch Bros. stock is to follow these procedures to execute a market order:
- Choose your action type (buy or sell).
- Enter the number of shares you wish to buy (or sell).
- Select the Buy (or Sell) option.
Apply the same procedure to limit orders (but include your execution price).
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Points To Note Before Investing In the Dutch bros stocks
Before you get around to how to buy Dutch Bros stocks, here are some points to note. CNBC’s Jim Cramer warned Thursday that investors should hold off on purchasing shares in Dutch Bros. Coffee, an Oregon-based chain that went public a month ago.
“You’ve got to keep the bat on the shoulder when a great company like Dutch Bros has a super-hyped IPO and the stock explodes higher because people like the product so much,” the “Mad Money” host said, referring to the fact that Dutch Bros. priced its IPO at $23 per share and its stock closed Thursday at $53.
On the other hand, Cramer emphasized that he is a great admirer of the firm — and its coffee — and believes there is an acceptable place to buy shares.
“I think you can start purchasing this one if it goes below $40 in a dramatic sell-off.” “I wouldn’t be surprised if it gets there before the insider selling lockup ends next year,” Cramer added.
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Conclusion
The detailed steps above will guide you on your journey on How to buy Dutch bros. Stocks. The advantages of investing in Dutch bros are honestly enticing, especially.
This post has gone over the key factors you should know before investing in Dutch bros. We hope this article gave you enough information to make an educated decision if you invest in Dutch bros.
Frequently Asked Questions
Insiders now own 14.856 percent of Dutch Bros shares, while institutions own 60.965 percent.
An online stockbroker is the most convenient way to purchase stocks. You may buy stocks on the broker’s website in minutes after creating and financing your account. Another alternative is to use a full-service stockbroker or to purchase stock directly from the firm.
The fiscal year of Dutch Bros concludes in December.
What investors should focus on is the company’s rapid retail expansion. From 2011 to 2016, Dutch Bros established 20 locations each year on average. However, during the last five years, the corporation has averaged 52 stores yearly. The business plans to add 98 outlets in 2021 and another 125 in 2022.
Dutch Bros Inc has a consensus price target of 35.00, with a high estimate of 64.00 and a low estimate of 30.00 among the 9 analysts providing 12-month price projections. The median estimate shows an 8.70% rise over the previous price of 32.20.
References
- https://www.cnbc.com – Dutch bros Jim Cramer says investors should wait for a pullback before buying
- https://www.fool.com – Green flag and 1 red flag for dutch bros stock
- https://www.benzinga.com – How to buy dutch bros IPO bros stock
- https://www.fool.com – Is dutch bros a buy
- https://www.oregonencyclopedia.org – Dutch bros coffee company
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