10 hours Ago By [email protected] (John Ballard, Jeremy Bowman, and Jennifer Saibil)
Buying shares of growing companies and holding patiently for many years is a simple path to building wealth. When you can buy shares of these companies at lower prices, it can help boost your long-term returns. To give you some ideas, read why three Motley Fool contributors see long-term upside in Dutch Bros ( BROS 3.
07% ) , Axon Enterprise ( AXON 2.12% ) , and MercadoLibre ( MELI 0.90% ) .
Huge expansion opportunities make this stock a no-brainer buy Jennifer Saibil (Dutch Bros): Volatile market conditions are creating incredible buying opportunities right now, but not all stocks are plunging. Consider Dutch Bros. It's dropped over the past few weeks with the market turmoil, but it's still up 18% this year, crushing the market.
Why are investors so excited about this stock? Its long-term opportunity is incredibly compelling. It operates a chain of coffee shops and distinguishes itself with a down-to-earth brand, unique beverages, and low prices. It's also meeting this moment in time, with most of its stores exclusively drive-thrus, although it's opening new stores in different formats to meet location-based demand.
Unlike some giant competitors, it's new and agile and building out with omnichannel options, technology, and speed in mind. The response has been very positive, leading investors to believe that this company can indeed expand from its current 1,000-store count to the 7,000 stores it envisions. It will take time, but that just gives investors more years to benefit.
That number is still way behind leader Starbucks , implying that there's also room to keep expanding. Revenue keeps growing at a rapid pace. It increased 35% year over year to $343 million in the 2024 fourth quarter, with same-store sales up 6.
9% and same-store transactions up 2.3%. Company-operated shop contribution margin expanded by 2.
4 percentage points to 28.9%, indicating that the company is getting more out of each store, and Dutch Bros is benefiting from strong economies of scale. Net income increased from a $3.
8 million loss the year before to positive $6.4 million in the quarter. At the current price, Dutch Bros stock still isn't cheap.
It trades at a forward 1-year P/E ratio of 74. That tells you how much the market is expecting from this amazing stock, and if you buy today and hold for 10 years, you're likely to be well-rewarded. A niche tech winner Jeremy Bowman (Axon Enterprise): Axon Enterprise, the maker of Taser electrical weapons and body cameras, has dominated the stock market over the last 10 years, and looks poised to continue to do so over the next 10 years.
The company has established itself as the clear leader in law enforcement technology, with a network of products including hardware like the items listed above and software that helps law enforcement agencies manage records, evidence, and investigations. Axon is also continuing to innovate in the AI era, introducing Draft One, a generative AI tool that writes first drafts of police reports based on footage from body and dashboard cameras. The technology is reportedly very popular with law enforcement agencies.
Looking out over the next decade, the company has several advantages that should drive the stock higher. First, it's the clear leader in its industry, meaning it should continue to build scale and expand relationships with its customers as it introduces new products. Axon has also demonstrated its ability to deliver consistent growth, generating revenue growth of 20% or more every year for the last 10 years.
The company is even expanding beyond its traditional customer base into the private sector. Last year, its biggest contract went to a logistics company, possibly FedEx or United Parcel Service , that wanted body cameras for its frontline delivery drivers. This shows that there are applications beyond law enforcement.
Finally, Axon seems well-equipped to ride out the disruption from tariffs and a potential recession. It sells its products primarily to state and local governments, and its technology can help agencies save money. Overall, Axon is in great shape to deliver strong results over the next 10 years.
Meet Latin America's leading e-commerce company John Ballard (MercadoLibre): Shopping online and using digital financial services is common in the U.S., but there's a huge opportunity in other regions of the world.
For example, 35% of adults in Latin America don't even have a bank account as of 2023, according to eMarketer. This is a huge opportunity for e-commerce and fintech powerhouse MercadoLibre. The stock delivered a return of 1,400% over the last 10 years, with room to run over the next decade.
The opportunity for growth is so huge that MercadoLibre has been at this for over 25 years and is still growing revenue at high double-digit rates. In the fourth quarter, revenue jumped 37% over the year-ago quarter. It continues to gain market share across its three largest markets -- Brazil, Mexico, and Argentina.
MercadoLibre offers an online marketplace with 67 million unique active buyers and growing. It's also seeing strong growth for financial services, including mobile payments and credit cards. Overall, the company's revenue reached $21 billion in 2024, and it converted that into $1 billion of free cash flow .
The business is capable of generating even higher margins and free cash flow relative to revenue. But there are tremendous opportunities to invest in growth, such as issuing credit cards that serve as a gateway to other services it offers, in addition to opening new fulfillment centers to support marketplace growth. These investments could pressure near-term margins but have a big payoff over time.
The stock has traded at a price-to-sales multiple between 3.6 to 25.9 over the last decade.
It currently trades at the low end of that range, sitting at 5.3 times trailing revenue at the time of writing. MercadoLibre investors should expect excellent returns as the company continues to expand across a region with 650 million people.
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