Jim Cramer - Mad MoneyDutch BrothersBROSDON'T BUYJan 24, 2024
Starbucks vs. Dutch Bros. and the effect of China
Dutch Bros. grew way too fast. SBUX has a problem in China and the U.S. given the Israel-Hammas war. SBUX will miss its next report given weakness in China and the U.S. So buy SBUX $5 lower, because China is reawakening from its slumber and will come back.
Last night they reported a top and bottom line beat with strong same-store sales growth. Shares jumped 8% today, but gave back almost all gains. Managers expect decelerating traffic, but that was due to a price increase already announced.
It went public a year ago and rode a rollercoaster, but he likes below $40 which is where it is after a sell-off. It's profitable and expanding alot. Their last quarter was fine.
Last year, he passed on all the IPOs and SPACs, because they were too expensive. Since then, all have been crushed. One exception is Dutch Bros. When it became public, he felt this was pricey at $53, but it has fallen to $48. The market has turned against growth stocks, but this has held up well. Dutch Bros. keeps putting up excellent numbers, so the share price hasn't fallen that much. Two weeks ago, they reported 10% same-store sales growth, and a record 35 store openings in Q4. It's a chain that's taken the country by storm. Its 180-day lock-up expires today.
A coffee maker from the northwest. Their model of kiosks selling in parking lots is great, better than indoor malls. A recent IPO, shares have been hammered, but he sees upside--we all need caffeine.
It went public two weeks ago at $23, surged to $55 and has since settled around $45. It's profitable. Its shares are being valued on its coffee and not the fundamentals--this makes no sense. Customers enjoy the huge caffeine in their coffee (he got charged by it).
Dutch Bros. grew way too fast. SBUX has a problem in China and the U.S. given the Israel-Hammas war. SBUX will miss its next report given weakness in China and the U.S. So buy SBUX $5 lower, because China is reawakening from its slumber and will come back.