Finding small consumer brands is a simple, effective strategy to build stock market wealth. Let's examine fast-growing companies that could provide huge shareholder returns over the next decade and beyond.
1. DraftKings Companies that benefit from technology can be long-term winners. The online sports betting market is predicted to reach $65 billion in five years, and DraftKings' (NASDAQ: DKNG) first-mover advantage in mobile devices has made it the market leader.
DraftKings enjoys over 30% of the North American market and keeps adding clients. The fourth quarter revenue was $1.2 billion, up 44% from the year before. DraftKings' client spending rise is noteworthy. Q4 average monthly unique payer revenue was $116, up 6% year over year and almost double the same quarter three years earlier.
DraftKings can generate revenue from existing consumers in states that allowed online sports betting. Addressable market in states where the company operates is estimated to rise from $20 billion to $30 billion by 2028.
More states should authorize sports betting, justifying the stock's high valuation. If DraftKings successfully expands into other areas like the lottery, where it recently acquired leading lottery operator Jackpocket, the company might be a huge winner for investors over the next decade.
2. CavaGroup Cava Group (NYSE: CAVA) is addressing a major Mediterranean fast-casual eating gap. It concluded 2023 with 309 eateries earning $177 million quarterly. Its growth pace and consistent, profitable strategy should make the company a good investment.
Cava ended 2023 with approximately 18% same-restaurant sales increase in the fourth quarter due to high traffic. In the fast-casual sector, this food is popular. Importantly, Cava's store-opening approach is lucrative. It earned $13.3 million for the year, up from the loss in fiscal 2022. Given its high restaurant-level profit margin, investors should expect long-term earnings growth.
Restaurant stocks can lose shareholder profits due to inconsistent execution, but Cava is focused. Management said on its previous earnings call that it is investing in AI to make its restaurants easier to run. It's also tweaking loyalty programs to boost traffic and training staff to provide a consistent experience everywhere.
Cava is successful, although its restaurant count is small compared to other businesses. As it opens more restaurants, it should grow profitably and reward patient shareholders.
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