Polen Capital, an investment management company, released its “Polen US SMID Company Growth Strategy” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. SMID cap stocks initially rose by more than 10% following November’s U.S. Presidential election, in another volatile quarter. However, they relinquished nearly all of those gains in December, as the U.S. Federal Reserve signaled that interest rate cuts would occur more slowly than anticipated, with reductions expected to start in 2025. Against this backdrop, the fund returned 3.0% gross, and 2.7% net of fees compared to the Russell 2500 Growth Index return of 2.4%. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Polen US SMID Company Growth Strategy highlighted stocks like Dutch Bros Inc. (NYSE:BROS), in the fourth quarter 2024 investor letter. Dutch Bros Inc. (NYSE:BROS) operates and franchises drive-thru shops. The one-month return of Dutch Bros Inc. (NYSE:BROS) was 8.20%, and its shares gained 140.92% of their value over the last 52 weeks. On January 31, 2024, Dutch Bros Inc. (NYSE:BROS) stock closed at $62.52 per share with a market capitalization of $9.64 billion.
Polen US SMID Company Growth Strategy stated the following regarding Dutch Bros Inc. (NYSE:BROS) in its Q4 2024 investor letter:
“Dutch Bros Inc. (NYSE:BROS), a drive-through coffee and beverage company with nearly 1,000 locations, reported compelling quarterly results, raising its full-year revenue and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) guidance. Robust same-store sales and steady unit growth have driven top-line growth of +28% year-over-year. Earnings growth appears poised to accelerate as the company ramps up unit growth in 2025, innovates its menu (into the untapped opportunity to drive food sales), and margins inflect higher with scale. We believe it’s still early days for Dutch Bros, which has a unique concept and is just starting to tap into proven value drivers like online ordering and food. We believe Dutch Bros has the potential to be a substantially long-duration EPS (earnings per share) growth business.”
A closeup of a customer tasting a freshly-made cold brew coffee product from the company’s shop.
Dutch Bros Inc. (NYSE:BROS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Dutch Bros Inc. (NYSE:BROS) at the end of the third quarter which was 37 in the previous quarter. In the third quarter, Dutch Bros Inc. (NYSE:BROS) generated $338 million in revenues representing 28% increase compared to previous year’s quarter. While we acknowledge the potential of Dutch Bros Inc. (NYSE:BROS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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