2 Brilliant Growth Stocks to Buy Now and Hold for the Long Term

• Dutch Bros plans to nearly double its store count to 2,029 locations by 2029, echoing Starbucks’ explosive growth in the 1990s.

• Roku generates 88% of its revenue from software and advertising, not the streaming devices most people associate with the brand.

• Both companies benefit from proven business models in growing industries where consumer habits are firmly established.

• 10 stocks we like better than Roku ›

Great growth stocks can be true game-changers. Shares of a company with above-average business growth tend to outperform the stock market, and the real magic happens when the stock stays hot for a long time. Not every growth stock will be a long-term winner, but one big winner can make up for several failed bets. For example, companies like Starbucks (NASDAQ: SBUX) and Netflix (NASDAQ: NFLX) have made many investors a lot richer over the years.

I didn’t pick those examples at random, by the way. I wish I had caught on to the Starbucks phenomenon in the 1990s, but Netflix shaped my retirement portfolio with a 9,900% return over the last 14 years. Read on to find two stocks poised to become the next high-growth superstars in the coffee chain and media-streaming industries, respectively. One or both should be a helpful addition to your diversified stock portfolio.

Dutch Bros (NYSE: BROS) plans to double its store count in fewer than five years. I want in on that growth spurt.

The company has been a mainstay on the West Coast for years. Founded in Oregon way back in 1992, it built a solid fan base and customer base in places like California, Arizona, and Washington.

A quick look at the coffee chain’s location map might make you think I missed Texas in that list of long-established operating centers. Dutch Bros drive-throughs are scattered across the state, with especially heavy concentrations in the big cities. The company’s ultra-friendly Broistas seem like a perfect fit for the state capital, you know — keep Austin weird!

But Dutch Bros opened its first Texan location as recently as 2021. It just looks like a firmly established market because Dutch Bros built a lot of stores very quickly.

In most cases, that type of rapid expansion would lean on franchise networks, allowing the central company to minimize its capital costs of building new shops. Not Dutch Bros, though. Management found that company-owned coffee shops often see stronger financial results than franchised locations. For instance, the average Dutch Bros store reported 3.7% same-store transaction growth in the most recent earnings report. Zoom in on company-owned shops, and that metric jumps to 5.9%. That’s not an outlier but a consistent trend over many quarters.

The pure drive-through setup comes with a helpful benefit, too. Smaller stores are quicker and cheaper to build and operate.

So, Dutch Bros is building an efficient store chain on a national scale, addressing a thirsty demographic of coffee lovers who like friendly service, and at a reasonable cost. The first Floridian store opened in 2024, and my Tampa Bay neighborhood got one earlier this month. Dutch Bros’ Florida map should look a lot like the Texas picture in a couple of years.

With roughly 1,050 stores in operation today, Dutch Bros wants to have 2,029 locations by the year 2029 (cute symmetry, right?). It’s an ambitious growth plan, and it does remind me of the rapid Starbucks explosion in the 1990s. I’m very tempted to grab a cup of Dutch Bros java and a few shares, especially since the stock trades 37% below its yearly highs right now.

Roku (NASDAQ: ROKU) is not just another media-streaming wannabe. The company started as Netflix’s streaming hardware division at the very start of Netflix’s incredible launch into a whole new business. This company has seen the media-streaming explosion from the inside and is exploring a similar worldwide market expansion a few years later.

You might think of Roku as your favorite streaming stick or the menu system you see when you turn on the smart TV in your living room. But that’s far from the whole story nowadays.

The devices segment accounted for just 12% of Roku’s revenues in the last quarter. It’s all about high-margin software and services these days, you see. Roku has evolved into a software license wrangler and digital advertising platform, serving more than 90 million households.

Does that sound familiar? Netflix dominated the video rental market with physical DVDs before shifting into digital video streams. Roku’s strategy shift may be less dramatic, but it opens the same doors for worldwide expansion. It’s much easier to supply online services in new markets than to set up manufacturing, shipping, and tech support services for physical devices.

And Roku benefits from the overall growth of the media-streaming industry. When popular channels like Netflix or Disney+ win new customers, streaming platform sales are likely to follow. On top of that, the Roku Channel is one of the most popular apps in Roku’s ecosystem, and the home page you see when you turn on the TV is prime real estate for ad spot sales.

It adds up to a sophisticated cash machine — Roku reported $1.05 billion of free cash flow over the last four quarters. The company is currently seeking market growth in Canada, Brazil, and Mexico, with more modest marketing pushes in places like Britain and Germany.

You should consider this stock before Roku goes truly global. It’s already a top performer in my own portfolio, having gained 78% in the last three years.

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Anders Bylund has positions in Netflix, Roku, and Walt Disney. The Motley Fool has positions in and recommends Netflix, Roku, Starbucks, and Walt Disney. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.

2 Brilliant Growth Stocks to Buy Now and Hold for the Long Term was originally published by The Motley Fool