Key Points
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Dutch Bros’ unique drinks and approach to business helped fuel a rapid expansion.
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The pandemic changed BJ’s Wholesale’s financials, helping spur a westward move that has reached as far as Texas.
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Cava Group is building a nationwide restaurant chain that drives sales from the increasingly popular Mediterranean food category.
- 10 stocks we like better than Dutch Bros ›
One successful investment strategy that often receives little attention is regional-to-national expansion. Stocks like Walmart, Home Depot, and Starbucks launched IPOs when they were regional outfits. They later generated outsized returns for investors as they expanded nationally and, at times, beyond the U.S.
The good news for investors is that they can use this strategy with up-and-coming businesses likely to operate in all 50 states and possibly beyond. If one wants to benefit from such growth, these three stocks might be a good fit.
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1. Dutch Bros
Dutch Bros (NYSE: BROS) began as a coffeehouse in Grants Pass, Oregon. It stood out from Starbucks by operating as a coffee stand, which means it has lower overhead than coffeehouses like Starbucks. Also, Dutch Bros’ innovative drinks and approach to service and community involvement have won over customers.
By the time it launched its IPO in 2021, it had grown to more than 470 locations in 11 states. It has expanded significantly since then, now boasting 1,225 shops across 25 U.S. states. Fortunately, it is likely not too late to capitalize on that growth. The company aims to grow to 2,029 locations by 2029 and believes it has a total addressable market of 7,000 shops in the U.S.
In the first half of 2026, revenue of just over $1.0 billion grew 32% year over year. The net income of almost $54 million surged 30% higher as the company invested in its expansion.
Moreover, the business keeps getting better, yet the multiple keeps shrinking. Now, it recently traded at a 72 P/E ratio. Also, it pulled back recently over growth concerns. Nonetheless, the pace of new shop development means its expansion should continue, and as its shop base grows, so should the stock price as Dutch Bros moves into new communities.
2. BJ’s Wholesale
As a warehouse retailer, BJ’s Wholesale (NYSE: BJ) has differentiated itself as a bulk seller by offering larger product sizes than grocery stores but smaller ones than other warehouse retailers. That approach can appeal to more customers, especially considering that families have become smaller over the years.
The stock has also become more attractive to investors. High debt levels and a regional concentration slowed its growth for decades. Its outlook changed in 2020, when the pandemic spurred enough growth to pay off most of its debt.
Now, the company, which was only on the Eastern seaboard, has expanded as far west as Texas, boasting 267 warehouses across 22 states. That expansion gives it a viable path for its footprint to continue marching westward.
In the first half of 2026, its revenue grew 13% year over year to $11.9 billion. Indeed, the rising cost of sales and investments in its expansion have slowed profit growth. With that, its net income of $317 million for the first two quarters of 2026 rose by only 5% year over year.
Furthermore, its P/E ratio of just 20 makes it a far better buy than rival Costco, which trades at 48 times earnings. Thus, as BJ’s expansion continues, the retail stock can benefit not only from new stores but possibly from a higher valuation as the company becomes more of a national competitor.
3. Cava
Cava Group (NYSE: CAVA) capitalized on the rising demand for healthy, fast casual options. It leads the way in Mediterranean cuisine, a style that has grown increasingly popular for its flavors and reputation as a healthy option. With less competition in this food category, Cava holds tremendous growth potential.
Its footprint has now expanded to about 450 locations across 29 states. The company set a goal of operating 1,000 restaurants by 2032, and one analyst estimates its total addressable market in the U.S. at more than 2,400, suggesting it may still be in the early innings of its expansion.
In the first half of fiscal 2026 (ended July 13), revenue of $807 million was up 32% compared with the same period in the previous fiscal year. This included a 9.4% gain in same-restaurant sales during the same period.
Also, while it kept operating expense increases in check, a one-time income tax benefit last year skewed year-over-year income growth, and net income of $47 million rose by only 6%.
The one caveat to buying this stock now is that many investors may balk at its 120 P/E ratio. Admittedly, that increases the risk of buying now, so interested investors should probably add shares slowly.
Nonetheless, investors could earn outsized returns over time by buying while the company’s footprint is relatively small. As the company’s expansion reaches its full potential, investors could see massive returns over the long term.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cava Group, Costco Wholesale, Dutch Bros, Home Depot, Starbucks, and Walmart. The Motley Fool has a disclosure policy.
