Josh Brown, CEO of Ritholtz Wealth Management, is praising coffee chain Dutch Bros as a stock with the “right” fundamentals that will perform in the long term. “If this were a normal market environment, I think the stock would be much higher because they are absolutely crushing it,” he said on CNBC’s “Halftime Report.” Shares surged about 20% Thursday after the company beat Wall Street expectations for its third quarter. Brown noted that revenue was 53% higher than the same quarter a year ago at $198.6 million and that the company is raising future revenue expectations at a time when companies are increasingly lowering forecasts or pulling them all together. In addition, Bank of America said the stock should see success both long and short term. Brown said he likes the drive-through coffee chain because it has a strong core business model. He said the company is “on fire” with its brick-and-mortar expansion, pointing to the fact that it has had five consecutive quarters of opening at least 30 stores. He also noted the company has seen no slowdown due to its price increase. What’s hurting the stock, Brown said, is that it went public in September 2021, which Brown called “the wrong time.” It was part of a rash of companies that went public during heightened trading mid-pandemic and are now seeing share values crater. Dutch Bros’ stock has lost more than 30% this year, which is a worse performance than the S & P 500 , which is down 17%. “All they can do is do what they’ve always done: keep opening stores, keep making the consumer happy, keep delivering,” Brown said. “They can’t control that growth stocks are out of favor or the Fed is doing whatever it’s doing.” He said investors should look at the stock long term rather than in the context of the current market downturn. “If you’re really an investor … you just have to accept the fact that you could be right on the fundamentals and the stock price [might] not reward you for that right away,” he said. “That’s the focus here on staying with it. And again, I’m hoping to be in it for the long term, not for a trade.” Meanwhile, Brown said he sold Meta a few days ago and missed the pop the stock saw today as the broader market rallied. He said he “has better things to do” with the money, specifically looking at other names that had prices coming down. Brown admitted he bought it “a little bit early” at about $99 per share. He said he should have waited like he normally does and got it closer to a per-share price in the lower $90 range. Meta surged 10% Thursday as the broader market cheered the latest consumer price index data, but it is down 66% this year. The Facebook parent is one of many Big Tech stocks that have floundered as advertising revenue slides and interest rates rise. The company laid off about 11,000 workers , which is about 13% of its workforce, on Wednesday as it looks to get lean in anticipation of lukewarm future earnings. CEO Mark Zuckerberg has been criticized for his focus on the metaverse, which analysts see as dragging the company down financially.
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