Top 7 Stocks for 2025

Welcome to Smart Money! My name is Eric Fry, and I’m glad you’re here.

Wall Street has sold investors on the idea that they should start with “micro” analysis – the idea that they should make investment decisions by comparing things like price/earnings ratios, income statements, or other company details.

But I do the opposite; I start with “macro” analysis.

I look for big-picture trends that drive huge, multiyear moves in entire sectors of the market.
I’m talking about trends that can spin off dozens of triple- and even quadruple-digit gains in just a few years.

Catching just one of these trends – at the right time – can help anyone accumulate enough capital to finance their dreams and to provide themselves with an enviable retirement…

When investors use a global macro strategy, they identify investment opportunities from a broad, global, top-down perspective, rather than by examining stocks one by one (a micro, bottom-up perspective).

And today, I want to highlight my Top 7 Stocks for 2025, each of which capitalizes on a powerful megatrend.

Let’s get started…

2025 Stock No. 1: Corning Inc.

If we were to play a word-association game and I said, “Artificial intelligence,” you might respond with something like “Nvidia,” or “Google,” or maybe “robots.” You probably would not say “Corning.”

But as it turns out, this iconic glass maker could benefit significantly from the AI boom, as a classic “picks and shovels” play.

For more than 170 years, the Corning Inc. (GLW) name has been synonymous with best-of-breed glass products. It has continuously innovated and set the industry standard for excellence.

In 1879, a 32-year-old Thomas Edison approached Corning with the concept of a lightbulb. This new invention would require a specialized glass that would be stronger than typical window glass but could also encase delicate filaments inside the bulb. Corning fulfilled the mission and became Edison’s sole supplier.

Over the ensuing decades, Corning produced a variety of glass-based marvels, dominating one industry after another. In the 1960s, for example, Corning was producing 100% of the world’s TV screen glass.

In 1970, Corning introduced the world to the company’s most marvelous marvel of all: low-loss fiber optics. With this groundbreaking invention, thin strands of Corning glass could replace copper wire in telecommunications networks and transmit millions of bits of information per second via photons (pulses of light), rather than electrons.

Thus, the world of optical communications was born… and it has continued to thrive ever since.

Thanks to Corning’s market-leading position in fiber-optic cable, the company became a stock market darling during the dot-com bubble of 1999–2000.  

During those go-go years, numerous companies were racing to deploy the fiber-optic networks that would provide bandwidth for this new thing called “the internet.”  

As this “fiber rush” gained momentum, Corning cashed in.  

Companies like Global Crossing, Williams Cos., Level 3 Communications, and others spent billions of dollars to build out telecom infrastructure using the fiber-optic cable Corning provided.  

According to fiber-optic research firm KMI Corp., telecom companies worldwide installed 48 million kilometers of fiber-optic cable in 1998. That number jumped to 63 million kilometers in 1999 and soared to nearly 90 million in 2000.  

From September 1998 to September 2000, Corning shares skyrocketed more than 1,300%. But that was just about the time the fiber boom peaked.  

By 2002, worldwide installations had collapsed to 55 million kilometers… and Corning’s share price had collapsed from its dot-com peak of $113 to just $1.10.  

As so often happens in the middle of a great, big boom, few market participants were able to recognize a bust-in-the-making.  

“We believe the global appetite for internet bandwidth and high-speed performance will continue to expand, and our products and technologies will make that possible,” Corning’s incoming CEO, John Loose, declared in late 2000, for example. “If there’s one recurring theme today, it is that this company is well positioned for sustainable growth.”  

Corning did, indeed, survive. And thanks to AI, now it will thrive…  

“More AI”

The path from AI to Corning is fairly direct and intuitive. AI technologies require enormous processing power from data centers. Because this new source of demand is surging, the companies that operate data centers are ramping up their capacity by building new centers and/or boosting the capacity and speed of existing centers.

That means surging demand for the optical fiber and components that Corning produces. Importantly, the growing AI workloads not only require more data centers, but also more fiber optic connections per data center.

According to CEO Weeks, modern data center systems that rely on Nvidia Corp.’s (NVDA) popular Hopper H100 GPUs require 10 times more fiber optics than a conventional data center server rack.

As Weeks explained on CNBC, “We’ve invented new fibers, new cables, new connectors, and new custom integrated optical solutions to dramatically reduce installation costs, overall time and space, and carbon footprint.”

Therefore, it is easy to see how more data center processing power means “more Corning.” On average, Corning estimates that data centers running AI large language models (LLMs) will require five times more optical connectivity than they have today.

In 2024 alone, hyperscalers like Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), and Meta Platforms Inc. (META) invested about $200 billion in data centers, hardware, and other technologies required to deploy generative AI models.

This massive investment caps a multi-year data center construction wave that has doubled the total capacity of hyperscale data centers during the last several years, according to Synergy Research Group. The Group predicts capacity will double by 2028, as 120-130 new hyperscale centers come online each year.

This building boom is finally showing up on Corning’s order books, with the company citing “strong adoption of our new optical connectivity products for Generative AI.”

Coincident with the data center boom, Corning is seeing trend improvements in its other major end markets, like smartphones. As a result, Weeks believes a $3- to $5-billion revenue surge will land on Corning’s income statement by 2028.

If these expected revenues arrive in a timely manner, Corning could earn as much as $3.00 per share within one year, and $3.50 within two years. At that level of profitability, Corning shares will be trading for 15 times 2026 earnings and just 13 times the 2027 result.

Obviously, this hoped-for revenue surge is not yet in the door. But the trajectory is very promising. If/As/When this revenue does materialize, Corning shares could easily double from the current quote.

In the wake of a favorable Barron’s story about Corning in June 2024, and the company’s subsequent upward earnings revision, the stock is no longer the “secret” AI play it once was.

However, it remains a relatively cheap and underappreciated AI play.

So, as these tech darlings like Nvidia and Amazon continue to prosper, I would favor the unloved Corning for the next phase of the AI boom.

2025 Stock No. 2: Alcoa Corp.

EVs and other green technologies require battery metals – like copper, nickel, lithium, and aluminum – and, as such, are creating powerful long-term demand trends.

These metals all play a critical role in a megatrend I first highlighted more than four years ago. I called it the “Second Electric Revolution.”

These 2018 observations are just as relevant today, perhaps even more so, since the related booms in EVs, energy storage, and other green technologies have become a global phenomenon of incalculable scale.

That spells good news for Alcoa Corp. (AA), the largest U.S.-based aluminum producer.

Now, aluminum does not receive the same high-profile attention that other battery metals do, but the solar industry is a prodigious consumer of aluminum, and, as I said, so is the EV industry.

Alcoa’s current valuation is cheap enough that the stock could deliver outsized gains, especially if aluminum demand ramps up more quickly and powerfully than investors currently expect.

But first the bad news…

After spiking to $4,000 a tonne in February of 2022 – during the early days of the Ukrainian invasion – the aluminum price tumbled about 40%, which caused Alcoa’s share price to drop as much as 65%.

However, the long-term outlook for the silvery metal is excellent.

A report from the London-based International Aluminium Institute (IAI) finds that global aluminum demand will jump about 40% by 2030 – and cleantech industries will power most of that growth.

As a result, the report states that aluminum producers will need to ramp up their production from 86 million metric tons in 2020 to 120 metric tons by 2030.

According to the research firm, Wood Mackenzie, solar industry demand for aluminum could increase from just under 3% of total world consumption to nearly 13% by 2040.

In the EV industry, aluminum does not play a significant electrification role, but the body and chassis of each Tesla Model S contains about 410 pounds of aluminum!

That’s no accident. Because aluminum is so much lighter than steel, EV manufacturers covet the metal. An aluminum vehicle can travel much farther on a single charge than a steel vehicle can.

For this reason, many EV manufacturers are ramping up their aluminum consumption. In fact, aluminum is the fastest-growing material in the automotive market.

In 2021, the auto industry accounted for about 20% of global aluminum demand. Within that slice of the pie, the EV portion was only about 2%.

But that percentage is certain to grow rapidly over the coming decade. Wood Mackenzie expects aluminum demand for EVs to hit 2.4 million tonnes by 2025, and then quadruple to nearly 10 million tonnes by 2040. At that point, EV demand for aluminum would total about 12% of the global total.

Obviously, these forecasts are merely guesses, but the trend is clear. EV demand for aluminum is ramping higher. And that’s just one source of demand from the cleantech sector.

According to the IAI, renewable energy needs will create demand for aluminum to replace existing copper cabling for power distribution. In total, the electric sector will require an additional 5.2 million metric tons by 2030, according to the group.

You get the idea.

Despite the strong supply-demand dynamics in the aluminum market, the Alcoa share price is reflecting all doom and no boom.

However, from this low valuation, Alcoa offers substantial upside potential.

2025 Stock No. 2: Savers Value Village Inc.

Two out of five items in the average Gen Z-er’s closet are secondhand. That’s the first reason to consider investing in Savers Value Village Inc. (SVV), but far from the only one. As the largest “for-profit” thrift store operator in North America, the company is perfectly positioned to capitalize on the Gen Z “thrifting” phenomenon.

Savers Value Village didn’t simply bolt a thrift operation onto a traditional retail model; it has specialized in thrifting since 1954, when founder William Ellison opened the first Savers store in San Francisco. The idea was radical for the time: partner with local nonprofits to collect donations, pay them for the goods, and then sell those goods in a clean, organized retail environment.

For decades, the company quietly grew under private ownership —expanding across the U.S., into Canada, and eventually into Australia, while perfecting the operational model. The stores never looked like the musty thrift shops of old. They looked like real retailers: wide aisles, sorted racks, organized departments. By the 1990s and 2000s, Savers had become the largest for-profit thrift chain in North America, with a business model that turned donations into both community funding and shareholder returns.

Today, Savers Value Village runs 300-plus stores across the U.S., Canada, and Australia, is staffed by 22,000 team members, and processes billions of pounds of donated goods annually. What looks simple on the sales floor is the product of 70 years of supply-chain engineering.

To support its business, Savers has built one of the most creative and durable sourcing models in retail. For example, the company pairs nearly every Savers store with a Community Donation Center (CDC). The company’s non-profit suppliers use these on-site donation centers to drop off used clothes, shoes, books, and household goods.

Unlike charities that simply accept items, Savers pays its suppliers by the pound for these donations. As a result, local charities get steady funding without the overhead of running stores, while Savers secures a consistent stream of inventory. In select markets, Savers supplements CDCs with GreenDrop donation stations. These freestanding pods or trailers extend the network and make donating easier.

After Savers collects these donations, its employees sort, price, and rack the sellable items. Merchandise hits the floor fast and cycles through quickly. Products that don’t sell at retail are bundled and resold into the global wholesale reuse market. That “multi-exit” monetization process converts “waste” into incremental revenue.

This model means SVV doesn’t rely on closeouts or liquidation deals. It owns its supply chain, from the donation bin to the cash register. That’s why it can keep prices dramatically below discount retail — 40% to 70% lower, according to management’s competitive checks.

The Moat: Industrial-Scale Treasure Hunting

Thrifting has always been about the “hunt.” What SVV has done is industrialize the hunt without killing the fun.

• Frequency and freshness. SVV cycles through its inventory about 15 times a year, which is an extraordinarily rapid rate. That’s nearly double Walmart Inc.’s (WMT) inventory turn and about five times faster than Lululemon Athletica Inc.’s (LULU). Effectively, therefore, Savers offers entirely new merchandise every three weeks.
• Scale married to local tailoring. With hundreds of stores, the company can apply data through its 6-million-member loyalty program to optimize assortment, flow, and seasonality at the local level. It can backstock off-season goods, drip them out at the right time, and flex floor space to match neighborhood demand.
• Multi-monetization. Unsold inventory isn’t a liability. The company exports, recycles, or wholesales it to create an incremental revenue stream, while also keeping landfill diversion part of its brand story.
• Brand halo. Because Savers funds local nonprofits, the firm operates with a built-in community goodwill advantage compared to traditional clothing retailers. Every drop-off becomes a story about supporting charity and sustainability — soft power that purely commercial resale apps don’t have.
• Capital efficiency. New stores are highly accretive. Each new store generates 15% to 20% profit margins, on a stand-alone basis.

Taken together, these elements create a moat that few competitors can cross. Traditional retailers can bolt on “resale corners,” but they can’t replicate Savers’ 70-year infrastructure of donations, partners, and processing know-how.

Given Savers’ business model, there’s plenty of room for the company’s growth to accelerate. In its most recent quarter, for example, U.S. same-store sales soared 6%, which is double or triple the growth rate of most clothing retailers. Looking ahead, the company should benefit from several factors.

First, because Savers operates fewer than 400 stores in North America, it has massive expansion potential across the U.S. and Canada. Furthermore, Savers thrift stores generate much higher foot traffic than traditional retail stores, so many mall landlords are courting them as anchor tenants.

Second, the thrift supply chain is tariff-free, which means Savers does not need to waste precious resources absorbing tariff expenses or try to rejigger its supply chain.

Third, because thrifting has become the new-new thing among Gen Z consumers, Savers finds itself in the right place at the right time. Gen Z has embraced thrifting because it is affordable, unique, and sustainable. Capital One Shopping reports that 83% of Gen Z have purchased or are interested in purchasing secondhand. One-third say they “always” shop secondhand.

Not surprisingly, therefore, the secondhand clothing market is growing five times faster than the overall apparel industry. According to ThredUp, the U.S. secondhand market grew 14% in 2024, compared to just 3% for the broader apparel market. Online resale was even stronger — up 23%. Analysts expect the U.S. resale market to nearly double by 2029, reaching roughly $40 billion. That’s not a niche; that’s an empire in the making.

Thrifting is not a fad. It is a generational realignment of values, consumption, and identity, which is why it is growing faster than traditional retail, and is more beloved among Gen Z shoppers than any fast-fashion brand. The racks of Goodwill stores and the online feeds of Depop are not cluttered with cast-off clothes. They are stockpiled with the future of fashion.

Savers is on track to earn about $0.50 per share next year, and $0.65 per share in 2027. That steady growth rate would give the stock a valuation of 25 times 2026 earnings and 20 times the 2027 result.

Although this valuation is not the “deep discount” variety you might find on the racks of a Savers store, it is slightly below the sector average. Furthermore, if the company accelerates its expansion plans, and/or boosts its profit margins as much as I anticipate, earnings could surprise on the upside.

2025 Stock No. 4: Coupang Inc.

Coupang Inc. (CPNG) may not be a household name here in the United States, but the company is well known in every Korean household. Coupang is Korea’s go-to provider of Amazon-like services.

In 2000, the company’s founder, Bom Suk Kim, dropped out of Harvard Business School in 2000 to return to Korea and launch his Amazon-wanna-be company. This ambition did not come cheap. He attracted billions of investment dollars from venture capital firms like Softbank Group and Sequoia Capital to build an end-to-end e-commerce and logistics infrastructure throughout Korea.

In 2015, SoftBank invested $1 billion in Kim’s start-up company, which made Coupang Korea’s first “unicorn” – i.e., a private company worth more than $1 billion. Softbank injected another $2 billion into Coupang in late 2018.

Thanks to early investments like these, Coupang has become the dominant e-commerce retailer in Korea. Its core business, Rocket Delivery, delivers 99% of its orders within 24 hours. This service also offers same-day delivery for many products.

In addition to this core business, Coupang also runs a takeout delivery business called Coupang Eats and an online grocery delivery business called Rocket Fresh.

Even though Rocket Fresh has already become Korea’s largest online grocer, it continues to grow rapidly. In the first quarter of fiscal year 2024, its delivery volume surged 70% year-over-year.

The company also provides a range of ancillary services, like Coupang Play, which allows customers to live-stream movies and sporting events, and Coupang Pay, which provides seamless payment processing across all Coupang services.

The company has been growing rapidly over the last several years, as it has expanded its dominance and improved its profitability. But its share price tells a different story.

Coupang came public in 2021 in an IPO priced at $35 a share. The stock nearly doubled on its first trading day, but has been drifting lower ever since. In February of 2024, the stock hit an all-time low of $13.50 a share, despite the fact that the company posted 18% revenue growth in 2023 and generated $1.75 billion in free cash flow.

For perspective, the company’s 2022 free cash flow was negative. Coupang also boasts a rock-solid balance sheet that features $1.6 billion in net cash. Because Coupang has reached the critical inflection point from negative free cash flow to positive flow, it gains the ability to expand its market share, both through acquisitions and targeted investments in foreign markets.

The company is pursuing both of these initiatives.

Coupang Expands Its Empire

Coupang purchased Farfetch in 2024, an e-commerce company focused on luxury clothing and beauty products. This acquisition expands Coupang footprint, both demographically and geographically. The London-based Farfetch sells its high-end products primarily to customers in the U.S. and Europe.

In addition to this diversification, Coupang is making a big push into the Taiwan e-commerce market and is making plans to expand into other regional markets.

Coupang is also investigating and testing ways to enhance its businesses with AI technologies.

As Kim explained on the company’s first quarter 2024 earnings call…

Machine-learning and AI continues to be – have been a core part of our strategy. We’ve deployed them in many facets of our business from supply chain management to same-day logistics.

We’re also seeing tremendous potential with large language models in a number of areas from search and ads to catalogue and operations among others. There is exciting potential for AI that we see and we see opportunities for it to contribute even more significantly to our business. But like any investment we make, we’ll test and iterate and then invest further only in the cases where we see the greatest potential for return.

Kim’s interest in AI and other cutting-edge technologies is not a new focus. Coupang’s e-commerce platform already utilizes AI and advanced robotics. Additionally, as of 2022, Coupang had 1,362 patents for its technology-enabled supply chain.

Although the company’s growth rate will likely slow as it becomes larger, Kim emphasizes that Coupang has captured only a “single-digit share” of the $560 billion Korean retail market “and an even smaller share of Taiwan’s.”

“We remain as energized as ever,” he says, “to transform the lives of every customer and stakeholder we touch to create a world where everyone wonders, ‘How did I ever live without Coupang?’”

After a slight earnings dip in 2024, the company is on track to post earnings of about $0.87 in 2025 and $0.95 in 2026. At that level of profitability, the stock is selling for 27 times 2025 earnings and 25 times 2026.

On the surface, these valuations are not classically cheap. However, it bears remembering that fast-growing companies like Coupang often command premium valuation multiples.

During Amazon’s first 10 years of profitable operations, from 2001 to 2010, its valuation averaged 78 times earnings, and never traded for less than 30 times earnings during that entire decade.

As Coupang expands its empire, and its earnings continue ramping higher, I expect its share price to post solid market-beating gains for many years.

2025 Stock No. 5: PayPal Holdings Inc.

PayPal Holdings Inc. (PYPL) is a titan of the digital payments industry.

The company traces its history to the year 2000, when Elon Musk merged his online bank, X.com, with Peter Thiel’s software company, Confinity, to form PayPal. The merged entity started spinning gold almost immediately for Musk and Thiel, as the inventive pair sold the company to eBay just two years later for $1.5 billion.

Then in 2015, eBay spun out PayPal as a separately traded company, which it has remained ever since. (Interestingly, 2015 was also the year that Musk and Thiel partnered up again to form OpenAI, the company that would go on to create the AI sensation, ChatGPT.)

During the last several years, the tally of active accounts on PayPal’s platform has swelled 63% to 435 million, while the annual volume of processed payments on its platform has doubled to a whopping $1.37 trillion.

PayPal’s dominant position in the “branded checkout” segment has powered most of that growth. The “PayPal/Venmo” checkout button you might see when shopping online is an example of that business. Around 80% of the top 1,500 retailers in North America and Europe feature PayPal in their digital wallets.

But PayPal is not taking its success for granted. The company is fortifying its market leadership by integrating leading-edge AI and machine-learning processes into key aspects of its operations. For example, the company uses AI to detect fraudulent transactions and to boost the approval rate of valid transactions.

Buy Now, Pay Later

PayPal’s growth strategy relies on three key initiatives…

1. Strengthening its core “branded checkout” solution…
2. Growing its “unbranded checkout” solution…
3. And developing and integrating AI processes that increase merchant sales, boost customer “stickiness,” and/or reduce operating expenses.

Branded Checkout is the foundation of PayPal’s business because of its high-margin fee structure. This business segment accounts for about one-third of the Total Payment Volumes (TPVs) the company processes, but it produces more than half of its total revenues.

PayPal is the market leader in branded online checkout with 35 million merchants on that platform. Although the company does not possess the commanding 99% merchant acceptance rate of legacy credit card companies like American Express and Mastercard, it has the largest acceptance rate of any “alternative payment method” (APM) provider. This category of payment solutions includes direct debit transactions, prepaid debit cards, and eWallets like PayPal, Venmo, Google Pay, and Apple Pay.

In 2020, PayPal launched a new “Buy Now, Pay Later” (BNPL) feature to bolster the appeal of its branded checkout offering.

This credit facility is similar to what established BNPL players like Klarna, Afterpay, and Affirm offer an immediate opportunity for shoppers to finance an online or in-store purchase at the point of sale.

Despite the brief operating history of PayPal’s BNPL offering, it has made rapid strides. Since launching BNPL, PayPal has issued loans to nearly 30 million customers. In 2022 alone, PayPal processed more than $20 billion of BNPL loans – up 160% from the prior year.

PayPal’s momentum in this market should propel it to undisputed leadership… and that’s no small matter in a sector that is growing as rapidly as BNPL consumerism.

BNPL-financed transactions now account for more than $300 billion in transactions worldwide.

Importantly, this category of transaction delivers an outsized benefit to merchants. PayPal customers who adopt BNPL solutions spend 30% more through PayPal than those who do not.

As PayPal attempts to expand its presence in the BNPL market, it will benefit from one major competitive advantage. The company has preexisting relationships with a huge swathe of the target market – both the merchants and the individual consumers.

Unlike its competitors, which must win new business to establish a BNPL relationship with a merchant, PayPal can deliver BNPL capabilities as a “bolt-on” to an existing relationship.

PayPal simply incorporates BNPL functionality into the existing checkout protocol. It is not a “new sale.” PayPal added BNPL capabilities to its existing relationship with Microsoft. Online shoppers at Microsoft’s Xbox Store can now access BNPL if they wish.

As CEO Dan Schulman explained…

Buy Now Pay Later continues to provide meaningful value to both our consumers and merchants. Over 32 million consumers have used our Buy Now Pay Later service since inception, at nearly 3 million merchants. We are now one of the most popular Buy Now, Pay Later services in the world… growing at 70% [year-over-year] on a currency-neutral basis.

Prudently, PayPal is working to “externalize” these loans by selling them to a third party, rather than retaining them on their own balance sheet. By selling the loans, PayPal removes the risk of holding bad loans.

The company took a giant step forward toward achieving that goal when it struck a deal to sell up to €40 billion of BNPL loans to the global investment firm KKR.

Under the terms of the agreement, KKR acquired PayPal’s existing European BNPL portfolio, along with future originations of eligible BNPL loans. PayPal will continue to conduct all the customer-facing activities of the loans, including underwriting and servicing.

This major transaction not only removes a large dollop of credit risk from PayPal’s balance sheet, but it also frees up capital to accelerate BNPL originations in Europe and/or to conduct shareholder-friendly activities like buying back stock.

PayPal expects to generate about $1.8 billion in net proceeds from this transaction and states that it will use a portion of the proceeds to boost its 2023 share repurchase program to $5 billion. In 2022, the company repurchased $4 billion in stock, which reduced the share count by about 3%.

Paving the Way

In addition to fortifying its leadership position in branded checkout, PayPal is expanding in the rapidly growing Unbranded Checkout segment.

The company refers to this solution as the PayPal Complete Payments (PPCP) platform, and it opens the door to a vast, new opportunity. Because this solution primarily serves small to mid-sized businesses, the total market opportunity is enormous. PayPal estimates the Total Addressable Market (TAM) to be roughly $750 billion.

The PPCP platform enables small businesses to accept credit cards and digital wallets as well as a range of Venmo and PayPal services. In April of 2023, PayPal gave this platform a major upgrade by adding Apple Pay to it.

That means that small businesses using PayPal as the backend for their payment processing can now accept Apple Pay alongside various other popular payment options.

Additionally, PayPal merchants can use their iPhone as a mobile point of sale terminal without the need for a dongle or other accessory device. Apple launched the technology in February of 2022.

CEO Schulman says that growing the unbranded checkout business has become a “strategic imperative” for PayPal – not just because it adds incremental revenue but also because it broadens and deepens customer relationships.

These expanded relationships produce vast troves of data that can fuel future AI enhancements.

2025 Stock No. 6: Dutch Bros. Inc.

If you live in the Pacific Northwest, you probably know this company and have frequented one of Dutch Bros. Inc (BROS) drive-thru coffee kiosks. If you live anywhere else in the U.S., you probably haven’t… but you will. 

This Starbucks-like juggernaut from Grants Pass, Oregon got its start in 1992 when a couple of brothers opened an espresso-vending pushcart down by the railroad tracks in the downtown area. 

Since then, it has grown to nearly 900 stores across 17 states. But the company’s new CEO, Christine Baron, a former VP from Starbucks Corp. (SBUX), has plans to expand the company’s U.S. footprint to more than 4,000 stores over the next 10 years. 

If you read a Reddit message board about this company, or talk to anyone who frequents one of its stores, you realize quickly that Dutch Bros. is not merely a place to buy coffee to go; it is a destination. 

Its product offerings and overall vibe elicit the same sort of cult-like devotion that Chick-Fil-A or In-N-Out do. 

Dutch Bros. is especially popular with the Millennials and Gen-Zers who tend to buy highly customized, sweet coffee drinks, and/or energy drinks. The company offers a wide array of both, including the company’s own “signature” energy drink called “Rebel.” 

The company’s formula for success is definitely working. As the chart below shows, its same-store sales have been trending sharply higher, while Starbucks’ have been sliding lower. 

In fact, many high-profile companies in the Quick-Serve Restaurant (QSP) space are suffering from declining or sluggish sales trends. 

Looking ahead, Dutch Bros. will pull two main levers to generate rapid growth… 

• Expansion. This process is already well underway. The company has opened at least 30 new stores each quarter, for 11-straight quarters. In the first quarter 2024, it ramped that tally to 45 new stores, including its first-ever openings in Florida. 
• Mobile ordering. Incredibly, mobile ordering has not been part of the Dutch Bros. growth story. Instead, it generates about 90% of sales from “old-school” drive-through or walk-up ordering. The company added mobile order-ahead functionality to its app in 2024, which sets the stage for a potential sales boost per unit.

Every decade, a “magical” restaurant-based firm seems to appear. McDonald’s… Starbucks… Subway… Panda Express… these brands seem to grow like wildfire. 

On the fundamental level, popular food service companies succeed simply because people like the product. People will drive for miles for the food. And don’t you dare criticize any of these popular restaurants in front of their fans. 

But there’s also a financial reason why these firms grow so quickly: cash flow. 

By bringing in more customers and generating higher profits per store, these stores often break even faster than competitors. Theoretically, that means popular chains can double their footprint every couple of years by simply channeling its internal cash flow to build new stores, which generates more cash flow. Two stores turn into four… which turn into eight… 16… and so on. 

It’s why companies like Panda Express expanded so quickly without ever going public or taking on franchises. Chain restaurants are simply great businesses if the economics are right. 

Dutch Bros. takes that truth to the next level. 

On the fundamental side, we’ve already talked about how people simply love Dutch Bros. The drive-through coffee shop has a cult-like following, and its stores are a destination, not just a place for caffeine.  

Then there’s the financial story. 

Dutch Bros. has a phenomenal business model because it is even more capital-light than rivals. As a drive-through coffeeshop, the firm has no hot kitchen, no public bathrooms, and no inside seating area. According to third-party estimates, startup costs per location can be as low as $150,000 – less than half of the cheapest strip mall Burger Kings. 

Meanwhile, each location is a profit-spinning machine. In the second quarter of 2024, the average corporate store (which includes newly-constructed ones) added $149,000 in quarterly gross contribution. The company does not publish cash-on-cash returns, but even rough back-of-envelop calculations suggest that new locations are breaking even in under three years. 

The result is a multi-bagger opportunity hiding in plain sight. Dutch Bros. plans to increase its store footprint by 27% in 2025, and will do so with a combination of existing cash flows and cash-from a $150 million debt issuance in the first quarter. Similar internally-driven growth rates could arise going forward, which means Dutch Bros. will grow exponentially until it finally saturates its relevant markets, perhaps sometime in the 2030s.  

2025 Stock No. 7: Devon Energy

Natural gas is a “Buy,” maybe not for the next few weeks, or for the next few months, but for the next few years. 

However, not all natural gas is created equal. Its location greatly affects its value.  

For example, the Delaware Basin’s natural gas, much like a long-distance sweetheart, is geographically undesirable. 

Today, natural gas prices in the Delaware Basin are depressed for one obvious reason: Gas has nowhere to go. The pipelines that run from the upper Permian Basin to hubs near the Gulf of Mexico do not have enough “offtake capacity” to transport all the gas the region produces. 

In the parlance of the oil & gas industry, this excess production is called “stranded gas,” and it is so worthless that producers must find ways to dispose of it. The producers who have permits to burn off the gas simply “flare” it at drilling sites. Otherwise, they must pay companies to truck it away, like dumpsters full of old mattresses. 

But the economics of producing natural gas in the Delaware Basin may be on the verge of a major transformation – one that will flip today’s negative gas pricing into solidly positive pricing. 

A company called Devon Energy Corp. (DVN) is ideally positioned to benefit from that prospective transformation. It is the fourth-largest natural gas producer in the Delaware Basin, and it has been investing heavily in natural gas transport and processing facilities. 

One of those facilities is the 580-mile Matterhorn Express Pipeline, which opened for business in 2024. This new pipeline, in which Devon holds a 12.5% stake, transports up to 2.5 billion cubic feet per day of natural gas from the Waha Hub to the Katy area near Houston, Texas. 

Following close on the heels of the Matterhorn, Devon’s new 365-mile Blackcomb Pipeline will enter operation next year. It will transport gas from West Texas to the Agua Dulce hub in South Texas, near Corpus Christi. 

Importantly, Devon has contracted for significant offtake capacity on both pipelines, which is why the company is planning to ramp up its natural gas production from the Delaware Basin over the next few years. 

Devon CFO Jeff Ritenour commented on the company’s plans, saying… 

[The new pipeline capacity coming onstream] is going to be a positive, obviously not just for Devon specifically but the broader sector as we move more of those molecules away from the Waha hub… 

We’re hopeful to take advantage of the LNG pricing improvement that we’ll see over time as those projects get built out… 

We’re thinking about the entire value chain and how we move these molecules to where we can get the highest realized price because at the end of the day, that’s what we’re trying to accomplish. 

Devon might also benefit from a new “wildcard” source of natural gas demand: data centers. 

As the big tech companies build ever-larger and ever-more-numerous data centers, they are struggling to secure the dedicated power supplies these centers require. 

For example, Dominion Energy Inc. (D), the utility that serves northern Virginia’s “data center alley,” announced in October 2024 that it “expects the time it takes to connect large data centers to the electric grid to increase by one to three years, amid a surge of requests, bringing the total wait time to as long as seven years.” 

Because of power bottlenecks like these – both current and prospective – the big tech companies are turning to every and any possible power source to satisfy their needs. 

Even nuclear power is making a comeback. Amazon, Alphabet, Microsoft Corp. (MSFT), and Meta have all inked deals to obtain dedicated nuclear-powered electricity. 

But nukes alone won’t solve the problem. NIMBY issues, coupled with the lengthy permitting and construction process, ensure that nuclear power will not become more than a partial solution. 

That’s why the big tech companies are also implementing an array of other power-generation technologies – ranging from solar-plus-storage to hydrogen fuel cells to natural gas “peeker plants.” Even geothermal systems are powering some data centers. 

But over the near term, natural gas will take the lead in supplying the additional power. According to Goldman Sachs, natural gas will satisfy 60% of the power demand growth from AI and data centers, while renewables will provide the remaining 40%. 

As a result of this growth, data centers could boost the demand for natural gas to fuel U.S. power plants by 20% to 45% over the next five years, according to Wells Fargo research. The mid-point of that estimate would be equivalent to doubling the current production from the Delaware Basin. 

The natural gas market offers three major advantages over competing technologies… 

1. It is abundant. 
2. It is cheap, especially in the Delaware Basin. 
3. It is a proven technology with relatively rapid permitting processes. 

Data center demand for natural gas could become especially acute in the Delaware Basin, with a new “Data Center Alley” potentially blossoming in the region if companies like LandBridge Company LLC (LB) realize their corporate ambitions. 

LandBridge, alone, hopes to host six individual data center sites, each of which would be powered by a one-gigawatt natural-gas-fired power plant. For perspective, six data centers powered by six one-gigawatt power plants would consume about 1.3 billion cubic feet per day – equal to more than 10% of the Delaware Basin’s current gas production. 

To be clear, data centers will not immediately impact the economics of natural gas production in the Delaware Basin. However, this wildcard source of demand, combined with the two new pipelines coming onstream, could produce significantly higher and sustainable natural gas pricing throughout West Texas. 

This likelihood is not lost on the heavy hitters of the U.S. oil & gas industry. They have been falling all over each other to acquire drilling acreage in and around the Delaware Basin. Because this region, which extends from West Texas into southeastern New Mexico, is less developed than the eastern Permian, it contains vast, untapped reserves. 

As, Jason McIntyre, Halliburton’s Permian area vice president, stated, “We tend to think with today’s activity and technology, if Midland’s got 15 to 20 years [of production] left, the Delaware is probably in the 20- to 25-year range.” 

The major operators seem to agree, as they have been scrambling to increase their acreage in the Delaware Basin. Here’s a sampling of notable buyouts from the last four years… 

• December 2021 – Continental Resources (now a private company}) closed a $3.25 billion deal to buy the Delaware Basin assets of Pioneer Natural Resources (now a part of Exxon). This acquisition added around 92,000 Delaware acres to Continental’s exploration portfolio, along with oil & gas production in the basin totaling 50,000 boe/d. 
• January 2023 – Matador Resources Co. (MTDR) closed a $1.6 billion acquisition of Advance Energy Partners. The buyout brought 18,500 acres of Delaware exploration property to Matador. 
• June 2023 – Vital Energy Inc. (VTLE) inked a deal to buy Forge Energy from EnCap. The transaction added 40,000 Delaware acres to Vital’s exploration portfolio. 
• August 2023 – Civitas Resources Inc. (CIVI) picked up 30,000 acres in the Delaware Basin, along with 59,000 boe/d of production, by spending $4.7 billion to acquire Hibernia Energy and Tap Rock Resources. 
• November 2023 – Permian Resources Corp. (PR) spent $4.5 billion to acquire Earthstone Energy. This buyout created an entity that controls a hefty 400,000 acres in the Permian, most of which is in the Delaware region, along with production of roughly 300,000 boe/d. 
• April 2024 – APA Corp. (APA), parent company of Apache, closed a $4.5 billion deal to buy Callon Petroleum. The transaction brought Apache about 120,000 Delaware acres along with production of 103,000 boe/d. 
• August 2025 – Devon Energy entered a 10-year agreement with British Gas owner Centrica plc (CNA.L) to supply liquified natural gas starting in 2028 to overseas markets. Devon has been shifting gas out of the Permian Basin to more lucrative markets on the Gulf Coast and abroad.

Meanwhile, Devon Energy was ahead of the game. Way back in January 2021, Devon kicked off this land-grab in the Delaware Basin by launching a $5.75 billion takeover of WPX Energy. After completing the deal, Devon possessed a massive 400,000-acre land position in the Delaware, along with significant production. 

Some years later, Devon is attempting to cash in. The company is devoting about 60% of its capital investment budget to drilling projects in the Delaware. 

Devon Energy’s share price does not reflect any upside potential from these new activities… nor much upside potential from any of its other activities.  

But as Delaware gas prices trend higher, in the context of stable-to-rising energy prices, Devon’s share price could soar from current levels. 

Moving Forward

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