3 Growth Stocks That Could Be Worth $1 Million in 5 Years
Dutch Bros could increase its store count sevenfold.
Upstart is back to triple-digit sales growth.
Lemonade expects EBITDA profits next year.
10 stocks we like better than Dutch Bros ›
It's growth time again in the stock market. The big tech companies have been reporting strong performance, and the financial stocks are telling a story of economic growth.
Many great growth stocks are riding the rise in the market, or generating it, and no matter what happens in the short term, they have incredible long-term prospects. In fact, depending on how much you invest, these stocks can lead to millionaire status even in five years from now. Consider Dutch Bros (NYSE: BROS), Upstart Holdings (NASDAQ: UPST), and Lemonade (NYSE: LMND).
1. Dutch Bros: A new concept in coffee
Dutch Bros is a young coffee chain that's demonstrating rapid growth and improving economics. It has a distinctive culture that focuses on fun, fast, and friendly service, and it's leaning into beverage innovation to carve out a niche in a market that's mostly just coffee.
Customers are responding, and Dutch Bros has been reporting increasing sales, both overall and comparable. In the 2025 second quarter, revenue increased 28% year over year, and same-shop sales were up 6.1%. Adjusted earnings per share (EPS) were up from $0.19 last year to $0.26 this year.
The opportunity in Dutch Bros is in its expansion. Although it just opened its 1,000th store, it envisions having 7,000 stores, with 2,029 stores by 2029. That implies an accelerated opening rate, since it's planning on opening 160 stores this year, and leaves open a long growth runway that should keep revenue increasing for many years.
If it can keep up a compound annual growth rate (CAGR) of 25% during the next five years, keeping the price-to-sales ratio constant, the stock would almost triple. It could be an incredible growth addition to a diversified portfolio, and if you invest enough, it could help you become a millionaire.
2. Upstart: A better lending model
Upstart has been a volatile stock, soaring in good times and plunging in challenging times. It's been all about interest rates, which is the case for many financial companies. Upstart, however, comes with the extra risk of being a young company in uncharted territory, which is why the impact on its stock has been more pronounced than on established bank stocks.
It uses artificial intelligence (AI) and machine learning to evaluate the creditworthiness of borrowers. As it refines its model, gets more experience, and demonstrates growth, there's a lot of future potential. In the second quarter, revenue rose 102% year over year on transaction growth of 159%. It's also back to net profitability on a generally accepted accounting principles (GAAP) basis of $5.6 million.
Upstart's expansion into newer types of loans is creating important diversification that's helping the platform. It recently started to roll out its first home loan product, and home loan originations increased ninefold from last year in the second quarter. Auto loans grew sixfold, and low-risk super prime loans continue to be a major part of the business.
At the current valuation, the stock is looking more stable. Upstart stock trades at a reasonable forward one-year price-to-earnings (P/E) ratio of 25. That gives it more room to expand. If interest rates decline, Upstart could continue reporting rapid growth, even if it falls back into double-digit percentage territory. This isn't a stock for the most risk-averse investor, but an investment in Upstart today could lead to market-beating gains during the next five years.
3. Lemonade: A better insurance model
Lemonade is another AI disruptor that's growing fast and winning fans. It makes sense to use AI to price insurance policies, since the business relies on sophisticated algorithms in any case. Lemonade has built its platform from the ground up using digital technology, and the interconnected model is fast and efficient, approving many claims in minutes. That's a clear edge over legacy insurance models, which typically involve independent agents.
In-force premium (IFP) increased 29% year over year in the second quarter, and customer count increased 24%. Lemonade targets a younger customer who's looking for their first policy, often renters insurance, and the intention is to impress them and get more of their business as they continue on their insurance journey, creating high lifetime value.
It's not profitable yet, but its net loss narrowed from last year in the second quarter, and management expects positive profit on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis next year. The loss ratio, which measures how much the company pays out in claims as a share of premiums, is decreasing, reaching 67% in the second quarter, or 70% for the trailing 12 months, well within management's target.
Lemonade stock is up 275% during the past year (as of Aug. 14), and if it maintains growth while keeping the loss ratio in check and becomes profitable, it should continue to skyrocket. For example, if revenue increases at a compound annual growth rate of 25% during the next five years, revenue will more than triple. If you invest enough today, your investment could soar during the next five years and be a part of a millionaire-maker portfolio.
Should you invest $1,000 in Dutch Bros right now?
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Jennifer Saibil has positions in Lemonade. The Motley Fool has positions in and recommends Lemonade and Upstart. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.
3 Growth Stocks That Could Be Worth $1 Million in 5 Years was originally published by The Motley Fool
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