The stock market is always in flux, which is why it’s so important for investors to focus on fundamentals and think long term. 2024 was a great year for the market, and that trend could continue into 2025.
But guess what — not only is it totally possible that this year will be a stinker on Wall Street, but it’s unlikely for the market to return annual gains consistently over any long period. Since 1928, it has only had more than five years of gains one on occasion, with eight straight years in the 1980’s. It has posted gains for the past two years. At some point, inevitably, the trend is going to go the other way.
If you want to see your money grow for the long term, it’s smart to think past the present. And if you’re looking for excellent growth stocks, consider Dutch Bros(NYSE: BROS), On Holding(NYSE: ONON), and e.l.f. Beauty(NYSE: ELF), all of which have the potential to triple their share price by 2033. That’s not an easy feat, but each of these companies has growth tailwinds that make it a possibility. Let’s see why.
Dutch Bros is a mid-sized but growing coffee shop chain. You may have heard of it if you’re an avid stock follower, but you may not have had a chance to sample its wares if you don’t live in one of the 18 states where it currently operates. But that’s going to change as it continues to open new stores in new areas.
It opened 38 new stores in the third quarter, and aimed to open about 150 over the course of the full year. In Q3, revenue increased 28% year over year, with a 2.7% increase in comparable sales. It has plans to open 4,000 locations over the next 10 to 15 years, which would require it to accelerate that pace. As it makes a name for itself and its custom, Dutch Bros-branded beverages, and if inflation moderates, its comps growth should improve. The chain is already highly profitable, and as well-established stores come to make up a larger portion of its portfolio, its capital expenditures should decrease as a portion of revenue.
There could be headwinds to overcome on its journey, such as high inflation and competition. It’s also still refining its model, which would need to be well-accepted in new markets.
If it can continue to grow revenues at a fast pace, the stock should easily follow. Assuming it achieves a compound annual growth rate of 20% over the next eight years, which is just a possible scenario, its sales in 2033 would be more than $5 billion — more than four times its current trailing 12-month revenue. That would easily justify the share price tripling — or more.
On Holding sells premium athletic wear and sneakers through its direct-to-consumer channels as well as via wholesale channels globally. Its brand, with its distinctive-soled shoes, is hot and getting hotter.
Sales increased 30% year over year in the third quarter, and gross margin expanded from 59.9% to 60.6%, unparalleled in its industry. On Holding’s goal is to be the “most” premium sporting wear company, and its strong following is driving high percentages of full-priced sales and widening margins.
Many factors have contributed to its recent successes. On Holding has been receiving extensive media coverage of its new LightSpray technology, which sprays shoes onto molds and “provides exceptional fit and support.” Its celebrity endorsers sported its wares at the Paris Olympics, and the company is also benefiting from its partnership with Zendaya.
As well as it has been performing, On Holding is still in an early growth phase. The brand is not well-recognized all over the world, but the more it gets its name out, the more new fans it recruits, and each one can come with a high lifetime value. However, it still faces tough competition from other premium brands, and growth rates should slow down as it gets bigger.
Postulating a compound annual growth rate of 15% through 2033, which is one possibility, On Holding’s revenues would triple to $7.6 billion, and it’s not hard to see how the stock could triple if that happens.
Like the other stocks on this list, e.l.f. is in a high-growth stage of its life and has huge opportunities. It’s already one of the top-selling beauty brands, with a robust cosmetics business and an even higher-potential skincare business.
In its fiscal 2025 second quarter, which ended Sept. 30, sales increased 40% year over year and gross margin expanded by 0.4 percentage points to 71%. Although its results have been hindered a bit by inflationary pressures, it’s performing well. But from an investing standpoint, the excitement is in its potential.
In the color cosmetics category, its sales increased 13% over last year while sales for the industry as a whole fell 5%. It was the top-selling brand in unit share, and it moved up into the No. 2 spot in dollar share. It’s the top teen cosmetics brand and the most-purchased brand for the Gen Alpha (ages 6 to 11) and millennial demographics.
E.l.f. Beauty is just getting started internationally. International penetration increased from 16% to 21% in its fiscal second quarter, and sales increased by 91%. Where it has already launched, it has quickly zoomed to the top, becoming the top-selling brand in certain German, Italian, and Dutch stores where it’s sold. There are still hurdles to overcome as it expands, with industry leaders still playing the largest role in beauty, both domestically and internationally.
If e.l.f. Beauty’s sales grow at a compound annual rate of 15% through 2033, which is one potential scenario, they’ll triple to $36 billion. E.l.f. stock could be a multibagger over that time, tripling your money or even more.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends e.l.f. Beauty. The Motley Fool recommends Dutch Bros and On Holding. The Motley Fool has a disclosure policy.
