Key Points

• Intuit is well-positioned to expand the reach of its core services.

• The next step is to upsell and grow the ecosystem over time.

• The company is expanding beyond its core markets.

• 10 stocks we like better than Intuit ›

Intuit (NASDAQ: INTU) has come a long way from being just a tax software provider. Today, it's a deeply embedded financial platform powering small businesses, self-employed workers, consumers, and marketers. With flagship products like TurboTax, QuickBooks, Credit Karma, and Mailchimp, the company has built a sticky, interconnected ecosystem.

But what comes next? At its fiscal 2025 Investor Day, Intuit outlined three major growth levers: expanding its core services, increasing revenue per customer beyond its tax products, and expanding globally. Together, they form a durable growth playbook designed to sustain long-term performance.

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1. Expand its core services and increase penetration

Intuit's first growth lever is obvious: to deepen its presence in its core verticals -- tax, accounting, personal finance, and marketing -- by increasing penetration across both existing and underserved customer segments.

In the U.S., millions of small businesses, solopreneurs, and gig workers still don't use professional software to manage their accounting and finances. However, Intuit is providing a compelling reason for them to consider its suite of products, particularly as it integrates artificial intelligence (AI) into QuickBooks and TurboTax to simplify processes and minimize manual input. The goal is to make the first-time experience effortless -- whether that's auto-categorizing expenses or surfacing personalized tax deductions.

Moreover, the company has recognized that midmarket businesses will be a key growth category in the coming years, marking a shift from its previous focus on individuals and small businesses. Here, it leverages its years of experience and investment in its platforms, including QBO Advanced and Intuit Enterprise Suite, to help mid-market customers run and grow their businesses.

To put the opportunity size into perspective, the total addressable market (TAM) for its core services across its platform is $71 billion. Another way to look at it is that there is a TAM of 47 million small businesses and 242 million consumers who Intuit can target, leaving a long runway for converting non-digital or partially served users into full-paying customers.

Besides recruiting new customers, Intuit can expand its presence within already penetrated segments by encouraging customers to utilize more tools that are already available to them. For example, the company can encourage customers who have started with the bookkeeping function to eventually adopt adjacent tools, such as invoicing, payments, and payroll.

Needless to say, the opportunity is massive!

2. Upsell and grow the ecosystem

Getting customers started with the company, whether in QuickBooks or Mailchimp, is just the beginning point. The next crucial step is to get them to embark on a journey of adopting additional services within the ecosystem.

This effort could involve bundling TurboTax with QuickBooks for self-employed users, integrating Mailchimp into QuickBooks to streamline customer outreach, and utilizing Credit Karma insights to help businesses and consumers make more informed financial decisions. The idea is to provide an end-to-end solution to its customers, making it the sole trusted platform for customers to run their businesses.

Here, an important enabler is the use of AI. For instance, the rollout of Intuit Assist -- its generative AI assistant -- across all its products is meant to help businesses do more with less. Whether it's automating cash flow forecasts, resolving support queries, or surfacing personalized tax tips, AI isn't just enhancing the product; it's also improving the overall user experience, making it more compelling for customers to adopt new products.

Another key initiative is connecting customers to human experts. Through TurboTax Live and QuickBooks Live, Intuit is combining AI-powered tools with professional advice to support customers with their needs. These expert networks also create an upsell path for users who require more in-depth guidance while expanding Intuit's revenue streams beyond DIY software.

Similarly, by combining TurboTax and Credit Karma, Intuit is targeting the tax and financial solution industry, which has a TAM of $135 billion. Particularly, by leveraging data to match users with products such as loans, credit cards, insurance, and other financial products, Intuit is building a financial marketplace that could become the next leg of its growth story.

3. Expand globally

Intuit's third growth lever is international expansion. The logic is straightforward: Small businesses are prevalent everywhere, and most still lack access to modern financial software. The company is focused on replicating its U.S. playbook in markets such as Canada, the U.K., and Australia, starting with core accounting tools and layering on tax, payroll, and marketing as trust is built.

What makes this compelling is the company's ability to leverage its ecosystem model. Once a customer adopts one product, they're far more likely to use another. The more tools they adopt, the stickier they become. For perspective, expanding globally adds more than $300 billion in TAM for the company.

If successful, international could be the next long-term revenue engine, complementing Intuit's more mature U.S. operations.

What it means for investors

Intuit isn't just reinventing itself; it's scaling what already works. With its ecosystem strategy, growing use of AI, and expanding addressable market, the company is positioning itself to compound value for years to come. For long-term investors, this is a business worth keeping a close eye on.

Should you invest $1,000 in Intuit right now?

Before you buy stock in Intuit, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $694,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $998,376!*

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Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy.

Key Points

• Intuit solves multiple customer pain points.

• Intuit leverages AI to improve its products and operations.

• The company aims to become the trusted platform for business owners.

• These 10 stocks could mint the next wave of millionaires ›

Intuit (NASDAQ: INTU) might seem like just another software company on the surface. But under the hood, it's quietly becoming a powerhouse of consumer and small business finance. With platforms like TurboTax, QuickBooks, Credit Karma, and Mailchimp, Intuit is building a cohesive ecosystem that serves customers across taxes, accounting, personal finance, and marketing.

And now, with AI integrated across its ecosystem and operations, it may be entering a new phase of growth. Smart investors are starting to take notice, and for good reasons.

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A platform solving critical pain points for its customers

Intuit is what you get when a product solves problems -- and has been doing it for decades. TurboTax is the default for U.S. DIY filers. QuickBooks dominates small business accounting. Credit Karma opens the door to consumer finance. Mailchimp provides SMBs with a low-friction way to reach their customers.

Each of these segments is sticky on its own. But together, they form a full-stack ecosystem that increasingly feeds into itself. For instance, a business that starts with QuickBooks might add TurboTax for filings and then Mailchimp to grow its customer base. By cross-selling additional products, Intuit solves a growing number of customer problems, making its platform indispensable to its customers.

The strength of Intuit's business model is evident in its financials. For the full year 2024, revenue and operating income grew by 13% and 16%, respectively. A solid set of numbers, even in a choppy macro environment, thanks to ongoing growth in subscribers and online ecosystem revenue growth.

That kind of resilience doesn't come from luck. It comes from a product suite that's becoming embedded in the financial lives of its users. As customers continue to rely on Intuit's ecosystem, the company is now laying the groundwork for its next growth lever: artificial intelligence (AI).

AI and automation are here to stay

AI is the most buzzworthy term in business today. While many tech companies discuss AI, Intuit has already integrated AI into many of its products and operations, with more to come in the future.

Intuit Assist, the company's generative AI layer, is now live inside all major products. It helps users complete tax forms, suggests bookkeeping entries, personalizes financial recommendations, and even automates marketing outreach. But what makes this interesting is not the surface-level functionality -- it's the business model leverage behind it.

By embedding AI into everyday workflows, Intuit enables customers to achieve more with fewer resources, resulting in higher revenue and lower costs. Doing that opens new avenues of growth while further increasing the switching cost for customers. For instance, with the help of AI-powered invoice reminders, customers receive payment 45% faster, resulting in improved cash flow and reduced bad debt.

Beyond customer satisfaction, the benefits of using AI are also evident internally. According to the company, developer velocity improved eightfold over the last four years, and marketing content creation time decreased by 50% following the introduction of generative AI solutions.

In short, AI is enhancing Intuit's products and making its operations more scalable. That's a rare double win -- and it's happening now, not in the future.

A long-term vision for growth

Under the leadership of CEO Sasan Goodarzi, Intuit laid out a clear long-term vision: to become the connected end-to-end platform that small and mid-market businesses rely on every day to run and grow their business, a strategic shift that could reshape how people manage their financial lives.

In other words, Intuit wants to be more than software. It aims to be the trusted platform that helps customers proactively address a wide range of problems, including reducing cash flow risks, automating tax savings, recommending financial products, and supporting business growth.

That ambition is backed by real assets: trusted brands, a suite of products and tools, deep AI capabilities, and direct relationships with millions of businesses and households. Particularly, with AI embedded across its ecosystem, Intuit can personalize every user interaction and deepen its relevance over time.

This vision, if executed well, could keep the company at the center of small owners' financial decision-making for years to come.

What it means for investors?

Intuit is an example of a company quietly executing and compounding its capabilities (and growth) over the years.

As a critical partner to millions of business owners, Intuit developed a highly sticky platform that's positioned to grow. Add to that its years of investments in AI, the tech company's prospects look extremely bright.

Smart investors are already paying attention, and so should we.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,048%* — a market-crushing outperformance compared to 179% for the S&P 500.

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Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy.

Key Points

• SoundHound AI offers integrated and proprietary AI solutions for more than 25 languages.

• It has huge global opportunities in the automotive and restaurant sectors.

• It is diversifying into other industries with different monetisation strategies.

SoundHound AI (NASDAQ: SOUN) might not enjoy the same hype as Nvidia or Palantir in the stock market, but this mid-cap voice AI company is quietly expanding its footprint across the globe. In doing so, it may be building something far bigger than most investors currently realize.

While SoundHound AI is best known for powering restaurant drive-thrus and car infotainment systems, there's far more to its growth story. From Asia to Latin America, it's tapping into one of the most significant, overlooked opportunities in AI: the shift to voice as the primary human-machine interface.

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A multilingual AI voice platform

Among the most powerful yet underrated assets SoundHound AI has are its integrated and proprietary solutions for more than 25 languages. That's more than just a technical feat. In global markets, offering a voice AI interface that functions properly in native languages is a must-have. English-only won't cut it.

As companies continue to integrate AI into new physical systems, from vehicles to smart appliances, the ability to manage local language and cultural nuances will become a significant competitive advantage. That's precisely why SoundHound has been winning new contracts and partnerships.

In the first quarter of 2025, it partnered with Chinese tech giant Tencent to expand its footprint in the global auto market, building on its existing relationships in the industry with manufacturers such as Hyundai, Kia, Stellantis, and Samsung's Harman division.

SoundHound AI also renewed contracts with two Japanese multinational companies that offer services across numerous industries, and it signed a deal to provide a major Latin American resort developer with an AI agent concierge.

These partnerships point to something bigger: Demand for AI-powered voice interfaces isn't limited to the U.S. It's a global trend, and SoundHound AI is emerging as a leader in the space.

Enormous opportunities for expansion in core industries

SoundHound AI's most significant and obvious opportunity lies in the global automotive industry, and it's not hard to see why. In 2024, new light vehicle sales reached 88 million units globally, and this number is expected to increase to 95 million by 2028. Automakers are racing to make vehicles more connected, voice-enabled, and intelligent -- and SoundHound AI is right at the center of that transition.

According to the company, its voice AI is in just 3% to 5% of the vehicles sold by its existing customers. In other words, the company has already landed some big clients -- it now needs to grow its relationships with each of them and to sign new deals with other OEMs globally.

There are several reasons why SoundHound AI is in the driver's seat when it comes to growing its automotive business. Unlike rival applications like Siri, Alexa, or Google Assistant, SoundHound offers a fully embedded voice AI that runs directly on each vehicle's local hardware -- no cloud connection or external ecosystem is required.

That matters a lot to automakers, as it allows them to maintain control over user data and retain their branding rather than handing over the user experience to Apple, Amazon, and Alphabet. This independent, customizable platform is a significant selling point in an era when brands want to control their in-car experience from end to end.

Another obvious area for global growth is the restaurant industry. In the U.S., SoundHound is already working with prominent chains such as White Castle, Chipotle, Jersey Mike's, and others to deploy its voice AI to handle customer interactions across phone ordering, kiosks, and drive-thrus.

But the bigger prize may be overseas. In the U.S., the company views its total addressable market in the space at around 800,000 restaurants, but globally, the number is far higher. Once it has fully proven the value of its product in the U.S., expansion into international franchises will be the logical next step.

More industries, more monetization

While automotive and restaurants are SoundHound's most established verticals today, the company's long-term opportunity goes far beyond these two industries. As voice interfaces become more capable, reliable, and natural, new use cases are emerging, opening the door to broader monetization.

The company has already expanded into areas like:

1. Customer service call centers, where AI agents (leveraging generative AI technologies) can automate routine phone interactions, bookings, and support.
2. Smart home and Internet of Things (IoT) devices, where embedded voice interfaces allow manufacturers to create branded, offline-capable experiences.
3. Hospitality and retail, where AI voice assistants help with check-ins, concierge services, or hands-free assistance in stores.

Each of these verticals offers a distinct monetization model -- from usage-based software-as-a-service contracts to per-device royalties to potential revenue sharing in commerce and transactions. As more industries adopt voice AI, SoundHound's diversified revenue streams could help it scale efficiently.

What it means for investors

SoundHound AI may still be at a fairly early stage of its growth, but it's quietly assembling the building blocks of a global voice AI empire.

If voice is indeed going to be the next major digital interface -- and there are plenty of signs that it will be -- SoundHound AI is a company that investors will want to keep a close eye on.

Should you invest $1,000 in SoundHound AI right now?

Before you buy stock in SoundHound AI, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Nvidia, Palantir Technologies, and Tencent. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.

Sea Limited (NYSE: SE) is back in the headlines -- and this time, for the right reasons. Once dismissed as a pandemic-era darling that couldn't sustain its momentum, the Singapore-based tech giant has been firing on all cylinders of late, with sustained profitability and growth across all segments.

Let's explore the factors that have gotten investors excited about Sea again.

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Sea has sustained its profitability in the past two years

For most of its early life, Sea pursued aggressive expansion in e-commerce and fintech by heavily subsidizing users and merchants. In particular, the tech giant expanded rapidly across Southeast Asia and Latin America by offering free shipping and discounts. While this approach led to hyper-growth, it came at a huge cost to the company, prompting investors to compare it to failed e-commerce companies, such as Wish.

Knowing such an aggressive strategy could not be sustained, Sea made a major pivot a few years ago to cut costs and investment, focusing instead on sustainable growth. While the pivot led to slower growth, it helped set the future direction for the tech conglomerate. More importantly, it brought in the first profitable year in 2023 -- a positive $163 million, as opposed to a net loss of $1.7 billion a year earlier.

Sea's first profitable year was a tipping point, since it demonstrated to investors the feasibility of its business model. The next crucial step occurred in 2024, when Sea not only delivered a net profit on the group level but also achieved positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for its e-commerce business.

With two years of profits under its belt, Sea has demonstrated to investors that its business model is effective and that its newly adopted strategy of sustainable growth, relying on internal profits for expansion, is the way forward.

Shopee continues its dominance

Founded in 2015, Shopee has grown from a scrappy newcomer to the undisputed e-commerce leader in Southeast Asia and a top player in Brazil. By 2024, Shopee commanded nearly 50% market share in Southeast Asia, placing it among the top three in every market where it operates.

This dominant market share is even more impressive considering the increasing competition from Lazada, TikTok Shop, and other platforms. Shopee has managed to retain consumer mindshare -- and, thus, wallet share -- through several key strategies: Improving logistics, driving cost efficiencies, and offering a growing selection of value-for-money products.

For perspective, Shopee delivered solid growth across all fronts in the first quarter of 2025, with gross order, gross merchandise value (GMV), and revenue growing by 21%, 22%, and 28%, respectively.

With economies of scale firmly in its favor, Shopee is doubling down on long-term investments -- enhancing its price competitiveness, improving service quality, and strengthening its content ecosystem. These efforts will likely keep the platform sticky and position it well for continued growth.

Garena is back in growth mode

Once the gem in Sea, Garena has been through a tough period, with multiple years of declining revenue and profitability following its reopening after pandemic lockdowns. But lately, even this problem child has made a solid comeback.

In the first quarter of 2025, Garena delivered a remarkable 51% increase in bookings to $775 million on the back of higher-paying users and bookings per user. Adjusted EBITDA improved even more, up by 56.8% year over year to $458 million.

While it's still early days (we don't know whether Garena can sustain its growth), it's useful to note that bookings have been trending upward in the last four quarters. Similarly, quarterly active users have remained above 600 million since the second quarter of 2024, thanks to the strength of Garena's flagship game Freefire, which remains the world's largest mobile game by daily active users and downloads.

In other words, there are good reasons to be optimistic about Garena's prospects in the coming quarters.

What it means for investors

Sea Limited has transitioned from a cash-burning growth story to a leaner, more focused, and profitable company. While risks remain, especially in competitive and regulatory environments, the company now has a track record to support its long-term vision.

In other words, Sea Limited may finally be sailing on calmer, more promising waters.

Should you invest $1,000 in Sea Limited right now?

Before you buy stock in Sea Limited, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sea Limited wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

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Lawrence Nga has positions in Sea Limited. The Motley Fool has positions in and recommends Sea Limited. The Motley Fool has a disclosure policy.

Shopify (NASDAQ: SHOP) has been a massive winner over the last decade, delivering a mind-blowing 3,664% return (as of writing) since going public in 2015.

While long-term investors have benefited enormously from this rise, potential investors wonder if Shopify is a worthy stock to add to their portfolio today.

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This article aims to explore the opportunities and risks associated with owning the stock over the next few years, helping investors make an informed decision.

Bull case:

Shopify has been an unusual company, as it competes against Amazon in the competitive e-commerce industry, yet has remained hugely successful over the last decade -- the secret lies in Shopify's unique business model.

As a start, Shopify is a software-as-a-service company focusing on enabling merchants to sell their products anywhere and everywhere. So the idea is that with the tools that Shopify offers, any seller can quickly set up an online store to sell their products globally, or employ the company's hardware-software solution (such as POS system) to sell in a brick-and-mortar store, or do both concurrently (omnichannel). In other words, Shopify aims to be the preferred partner for merchants, benefiting only when they are successful.

Shopify's fee structure further amplifies its focus on merchant success. With a monthly subscription fee of $29 for its basic plan, a new merchant can open an online store with plenty of softer tools at their disposal to make their first sale. Beyond that, Shopify takes a transaction fee ranging from 0.2% to 2% for each successful sale, aligning its interest with the seller's success.

This win-win arrangement helps explain Shopify's sustainable growth over the years. When merchants become successful using Shopify, new sellers get motivated to start their entrepreneurial journey using Shopify's platform. Besides, successful merchants contribute more revenue to Shopify and are also likely to become loyal customers.

And that brings up another key point to highlight about Shopify, namely its recurring revenue nature. For the year ending Dec. 31, 2024, the tech company had $178 million in monthly recurring revenue, or $2.1 billion annually, from its monthly subscription fees.

This revenue is extremely sticky and likely to continue growing over time. The rest of Shopify's revenue is correlated with its gross merchandise value (GMV), which is also recurring, provided that it continues to help merchants sell more products over time. For perspective, GMV grew by 26% in 2024, demonstrating the company's continued growth momentum.

Shopify's solid business model makes the company extremely attractive to investors, especially considering the vast growth opportunities ahead, both locally (in online and offline retail) and internationally. If the company can remain focused on delighting its users, it is likely to attract and retain more successful sellers over time.

Bear case:

While there is plenty to like about Shopify, investors must also consider the downside risk of owning the stock.

One thing to note is that as Shopify continues to grow in size, it may struggle to sustain its historically high growth rates, even though it is likely to continue growing at respectable rates.

For instance, Shopify experienced explosive growth during the pandemic as online sales penetration skyrocketed. However, that tailwind has faded, creating some challenges for the company during the later-pandemic period. The silver lining is that Shopify has expanded beyond its online roots to offer omnichannel solutions for merchants, allowing it to continue growing its total retail market share through its brick-and-mortar solutions.

Besides, as Shopify scales, it will inevitably gain more attention from giants like Amazon, which will try to fend off the younger player from taking market share. With enormous resources (financial, human talent, and technology), Amazon could pose a threat to Shopify's ongoing expansion.

For example, Amazon could offer a more comprehensive set of tools (including logistics, cloud computing, and AI solutions, as well as advertising) to attract key Shopify merchants to its marketplace.

Beyond competition risk, Shopify is increasingly facing macro risks, especially now that it has sellers globally. The recent tariff war has become increasingly burdensome for small and medium-sized sellers to conduct business, which could lead to either lower sales volumes or even the outright closure of their businesses.

If merchants suffer, Shopify will feel the pain since its revenue is closely tied to merchants' success.

It doesn't help that Shopify's stock trades at a significant premium, posing substantial rerating risks if the company fails to meet investors' expectations. As of the time of writing, Shopify's stock trades at a price-to-earnings (P/E) ratio of 110, a high figure by any standard.

What it means for investors

Shopify has a solid track record of execution and growth, leveraging its business model and customer-obsessed culture. These advantages strategically position it to sustain its growth momentum.

Still, investors should not expect a smooth ride, as the tech company must fend off competitors while navigating turbulent macroeconomic situations, such as tariffs. And with the stock trading at premium levels, buying the stock today is not for the faint-hearted.

Only those with a long time horizon (more than five years) and a strong conviction should consider buying the stock.

Should you invest $1,000 in Shopify right now?

Before you buy stock in Shopify, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Shopify wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Shopify. The Motley Fool has a disclosure policy.

Dutch Bros (NYSE: BROS) has quickly become one of the most exciting names in the food and beverage industry. While more prominent players like Starbucks dominate the market, Dutch Bros has carved out its niche with a unique drive-thru model and an intensely loyal customer base.

But what makes Dutch Bros a stock to watch for the long run? Here are three key reasons this fast-growing coffee chain is worth investors' attention.

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1. A well-proven operating model

Dutch Bros isn't just another coffee company -- it has revolutionized the drive-thru coffee experience. Unlike traditional sit-down cafes, Dutch Bros focuses on speed, efficiency, and customer experience, allowing it to serve more customers per hour. Such an approach delights customers and also generates a good return on investment for the company.

Besides, the coffee chain is well known for its customizable drinks, particularly its cold and ice-blended beverages. Personalized beverages align with younger consumers' preferences and differentiate them from competitors. In 2024, cold beverages accounted for 94% of all drinks sold to Generation Z. The company has also moved beyond its early roots of serving coffee-based beverages to other products such as energy drinks and refreshments.

Beyond serving great beverages fast, the food company also focuses on building a loyal customer base. It relies on strategies like excellent customer service, community building via social media, and a loyalty system to reward customers. As a result, 71% of its transactions in the fourth quarter of 2024 went through the loyalty program, up from 44% in the first quarter of 2021.

Its highly efficient operating structure, differentiated product offerings, and loyal customer base explain its solid track record of growth. In the last five years, store count grew by 42% on a compound annual growth rate (CAGR), and revenue expanded by 50%.

2. Great store economics

While many restaurant chains struggle with high overhead costs and long capital payback periods, Dutch Bros stores deliver strong financial performance with an efficient cost structure and fast profitability.

Let's look at some quick numbers. The company expects to spend $1.25 million on capex for each new store in the future, with an expected annual sale of $1.8 million per new store in the second year of operation. With a targeted shop contribution of 30%, the return on investment is around 43%, giving it a payback of just slightly above two years. Note: Shop contribution is defined as gross profit plus depreciation.

Dutch Bros' solid return on investment is not without reason. One thing is that, unlike traditional coffee shops, Dutch Bros stores are smaller and require fewer employees, which keeps operating expenses lower. A low capex and relatively low overhead allow the company to generate strong store-level margins early on.

Besides, the beverage company has a proven track record of delivering same-store sales growth (SSSG) over time. For perspective, stores opened in 2020 and prior delivered 4.6% SSSG in 2024, and newer stores did even better, reaching 13.7% for those stores opened in 2023. SSSG will further enhance the return on investment in older stores.

These factors should sustain Dutch Bros' excellent store economics for the foreseeable future.

3. A great growth story

Dutch Bros has already proven its business model and store economics. The focus is on scaling up and expanding the business into new markets and products.

The company currently has just under 1,000 stores across 18 states. Over time, it expects to add another 3,500 stores in existing states and also expand into other new regions, particularly on the East Coast. In 2025 alone, it plans to add at least 160 stores in existing and new areas. If successful, this latest expansion will quadruple the store count in the coming years.

However, that's just one part of the story. It is actively adding new SKUs to its menu to grow SSSG, particularly focusing on food products. For perspective, Dutch Bros' food sales in 2024 are less than 2% of revenue, much lower than its industry peer, where food accounts for around a quarter of the sales. Expanding its food menu presents a major opportunity for increasing same-store sales.

Another area that could see good growth is the energy drinks segment, which is expected to grow faster than the coffee industry. With around 25 % of its sales from customized energy drinks, Dutch Bros is well positioned to benefit from this trend.

Overall, the food company expects to grow its top line by 20% in the coming years, with new stores growing at a mid-teens growth rate and SSSG in the low digits.

A growth stock to keep on the radar

It is not difficult to see why Dutch Bros could be a great growth stock. It has a proven operating model, solid store economics, and a long growth runway.

Unsurprisingly, the stock doesn't come cheap -- as of writing, it has a price-to-earnings (PE) ratio of 179.

It will be best to keep the stock on the radar and wait for a more reasonable entry price.

Should you invest $1,000 in Dutch Bros right now?

Before you buy stock in Dutch Bros, consider this:

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Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.