3 Top Stocks That Could Double by 2028

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2 days ago

Key Points
Lululemon's loyal customer following is worth more than the stock is trading at right now.
This coffee chain sees the opportunity to expand its store count sevenfold.
Investors seem to be underrating the recovery in this ridesharing stock.
10 stocks we like better than Lululemon Athletica Inc. ›
Finding stocks that can double within three years is not that difficult if you know what to look for. There are different approaches to take to this. You can either stick with fast-growing companies betting on business momentum and market sentiment to carry the stock higher, or you can search for strong companies that are undervalued and due for a rebound.
Three Motley Fool contributors are here to share three ideas that fit either investing style. Read on for why they like Lululemon Athletica (NASDAQ: LULU), Dutch Bros (NYSE: BROS), and Lyft (NASDAQ: LYFT).
Wall Street doesn't understand Lululemon
(Lululemon Athletica): Like other apparel brands, Lululemon has struggled over the past year. With the stock down 62% from its previous peak, you would think Lululemon is reporting weak financial results right now, but it's not. Sales are still growing, margins are healthy, and Wall Street analysts still expect Lululemon's earnings to grow meaningfully in the next two years.
The stock could easily double in value if the price-to-earnings ratio that investors are willing to pay for Lululemon's earnings per share increases from the current 13 multiple on this year's consensus estimates to 26, which is where the stock has historically traded. But using the consensus $16.91 estimate in the next two years, a 25 forward earnings multiple puts the share price at $422. That's a reasonable target for where it could trade in a stronger economy.
Lululemon is demonstrating solid brand strength in this weak consumer spending environment. Revenue grew 8% year over year on a constant currency basis last quarter, and management maintained its full-year guidance for revenue growth of between 7% to 8%.
Margins are expected to be under pressure this year due to external factors, such as tariffs, higher discounting, and investments in growth initiatives. But Lululemon's premium brand positioning has served it well for 20 years, allowing the business to earn a much higher gross profit margin than competing brands, and that's still the case. This indicates that Lululemon has a competitive advantage built on brand power.
With first-quarter revenue coming in at the high end of management's guidance, Lululemon is poised to experience stronger growth when consumers are in a better position to spend. In the last quarter, management noted strong customer responses to new product launches in shirts and pants with Daydrift and BeCalm.
Lululemon is a resilient brand that has recovered from worse episodes, such as the 2013 recall over its Luon pants. It has one of the most loyal customer followings in retail. I wouldn't bet against it, and I believe it's deeply undervalued at around $200.
This coffee chain has a massive expansion opportunity
Jennifer Saibil (Dutch Bros): Dutch Bros is a young coffee chain that's rapidly expanding across the U.S., gaining fans and generating high sales. It has crafted a differentiated brand, which isn't so simple when you're talking about a cup of coffee. It's highly deliberate in its beverage and menu curation as well as its real estate strategy, and customers are loving its innovative products and its fun and friendly culture.
This is a concept that can easily cross state lines. What began as a coffee truck in Grant Pass, Oregon, three decades ago is now past its 1,000th store and climbing up the East Coast. More importantly, management thinks it can reach 7,000 stores. In the short term, it plans to reach 2,029 stores by 2029, doubling its store count over the next five or so years.
Investors are confident because Dutch Bros has been reporting fantastic results. In the 2025 second quarter, revenue increased 28% year over year, and same-shop sales were up 6.1%. Dutch Bros offers franchise opportunities, but its company-owned stores did even better, with a 7.8% increase in same-shop sales. Net income is growing even faster, up 73% from last year to $38.4 million.
Management's guiding growth strategy includes beverage innovation, paid advertising to build its brand as it enters new markets, and developing its loyalty program. It recently launched mobile ordering throughout its stores, and it's rolling out a new morning menu to drive more beverage sales at that critical morning coffee hour.
If Dutch Bros can grow its sales at a compound annual growth rate (CAGR) of 25% over the next three years, its revenue will reach $2.8 billion, or about double today's trailing 12-month figure. Stocks often track profitability, which is likely to keep growing even faster than sales. As it grows, Dutch Bros stock will likely follow.
An under-the-radar growth stock
Jeremy Bowman (Lyft): Lyft has been a disappointment since its 2019 IPO. Like rival Uber, the company entered the market overvalued and sold off shortly after its debut.
While the stock seems to have been forgotten since then, the business has made some significant improvements, including reaching profitability, expanding to Europe through acquisitions, and innovating with its product in ways that are outpacing Uber.
In the second quarter, revenue rose 11% on a 14% increase in rides, which was its ninth consecutive quarter with double-digit ride growth.
Its Lyft Silver program, geared at making ridesharing easier for seniors, is exceeding expectations. It's driving one in five new user activations and achieving a retention rate of nearly 80%.
Net income also jumped from $5 million in the quarter a year ago to $40 million, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 26% to $129 million.
Over the last four quarters, the company has generated nearly $1 billion in free cash flow, meaning it trades at just 6 times trailing free cash flow. That seems like a mismatch for a stock that's delivering double-digit top-line growth, expanding margins, and growing its addressable market.
Lyft stock has been essentially flat over the last three years, but the business has improved significantly during that time. Investors seem to be underrating the recovery here, and the Freenow deal in Europe gives it significant upside in the coming years.
If management continues to execute, a double looks to be well within reach over the next three years.
Do the experts think Lululemon Athletica Inc. is a buy right now?
The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Lululemon Athletica Inc. make the list?
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Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has no position in any of the stocks mentioned. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc. and Uber Technologies. The Motley Fool recommends Dutch Bros and Lyft. The Motley Fool has a disclosure policy.
3 Top Stocks That Could Double by 2028 was originally published by The Motley Fool