You can build incredible wealth in the stock market, and it's not as difficult as you might think. The key is to patiently hold shares of a growing company that still has a large market to expand into. Here are two stocks that have monster return potential.
1. Dutch Bros
Dutch Bros (BROS 2.68%) is a fast-growing beverage chain that is building a unique brand. About half its menu items are coffee-based beverages, but it's distinguishing itself from the likes of Starbucks with a range of other drinks on its menu, including lemonade, smoothies, and sparkling sodas.
The business was founded in 1992 by brothers Dane and Travis Boersma, and it went public in 2021. After underperforming over the last few years, the stock has settled into a more reasonable valuation range that sets up attractive return prospects as the company continues to expand across the U.S.
Revenue grew 28% year over year in the third quarter. It has reached 950 locations across 18 states, which leaves plenty of room for more growth. Same-shop sales, which measures growth of existing shops open at least 15 months, were up 2.7% year over year, consistent with the single-digit increases over the last few years.
Moreover, Dutch Bros is staying disciplined in opening new locations without being too aggressive. It is profitably expanding, with net income of $22 million in each of the last two quarters.
Investing in profitable and growing restaurants when they are still small is a great way to build wealth in the stock market, and Dutch Bros is clearly looking like a very promising opportunity. With 32 states that haven't seen a Dutch Bros shop yet, there is plenty of growth that can fuel monster returns over the next 20 years.
2. Coupang
Coupang (CPNG -0.09%) is South Korea's leading e-commerce store. It's often described as the Amazon of South Korea, but the company is building a unique advantage in serving densely populated areas that could give it an edge as it expands. The stock has soared 30% over the last year.
Coupang had 22.5 million active customers that placed at least one order during the last quarter. Active customers rose 11% year over year in the third quarter, which, along with increased spending from existing customers, is driving high double-digit growth in revenue.
A key advantage for Coupang is its fulfillment infrastructure, which management says can deliver 99% of orders within one day.
This is not easy: There are more than 15,000 people per square kilometer in Seoul, South Korea. But with Coupang's Dawn delivery service, a customer living in a large apartment complex can place an order by midnight and have it delivered by 7 a.m. the next day. Being able to serve thousands of customers with fast delivery in a highly populated area can work to Coupang's advantage as it expands into other geographies.
The company would find it challenging to compete with Amazon in the U.S., but it is having success in Taiwan, and there could be other markets around the world where its delivery system can add value for consumers.
However, most of Coupang's growth is still being driven by existing customers in South Korea, and management still sees potential to grow sales from its current customer base as it expands its selection.
For a company increasing revenue 27% year over year in the most recent quarter, the stock could be a rewarding investment. The shares trade at a reasonable valuation of 1.4 times trailing sales, which can support excellent returns as the company continues to grow.
