Analyst advised to buy shares of mid-cap rival Starbucks on the downturn

Now is a good time to buy shares in Dutch Bros, a small competitor to Starbucks, says Motley Fool freelance analyst Neil Patel. The company's stock is trading 45% below its peak, while its fundamentals remain strong, he explains. This creates an attractive entry point for investors.

Dutch Bros. fundamentals, including a steady increase in comparable sales, which are counted by specific locations and exclude the effect of network expansion, remain strong, writes analyst Motley Fool. This sets it apart from its competitors, the article suggests. The Dutch Bros. chain includes 1,136 locations, The Motley Fool noted.

For 2025, Dutch Bros. reported revenue growth of almost 28% to $1.64 billion, with comparable sales adding 7.4%. Net income for that period soared 76% to $117.3 million. Motley Fool analysts call this dynamic impressive.

He also points to Wall Street's forecast that EPS will grow at an average annual rate of 27.4% over the next three years - faster than revenue. For example, Dutch Bros. expects sales to increase 22-24% to $2-2.03 billion in 2026.

Among the risks for investors Patel named possible decrease in sales. Another risk, in his opinion, is connected with high volatility of Dutch Bros securities in the last two years. Therefore, the analyst advises them exclusively to long-term investors.

Since the beginning of the year, Dutch Bros. quotes have fallen by almost 17%.

The company's securities have 19 "buy" recommendations from Wall Street analysts and only one "hold" recommendation. The average target price is $78.2, which is almost 54% higher than the stock price at the close of trading on February 25.