Drive-thru coffee chain Dutch Bros (NYSE: BROS) has been an unstable investment so far. But the company is already profitable and growing like wildfire. Let me show you why Dutch Bros could be a great stock to buy now and hold for the long haul, despite its lofty valuation ratios.

Dutch Bros versus Starbucks

At first glance, Dutch Bros looks like a rebranded version of Starbucks (NASDAQ: SBUX). The menu centers around coffee drinks with add-ins like pumpkin spice or Irish cream. Like Starbucks, the company also offers some snacks and lighter drinks, from lemonade and iced tea to frappucinos ("blended freeze" in the Dutch Bros lexicon) or hot cocoa. So far, there's hardly a difference in sight.

But the two companies become more different the closer you look.

First and foremost, Dutch Bros is all about the drive-thru window. Most of its restaurants don't even have indoor seating, focusing exclusively on the in-car experience.

In turn, that experience is friendlier and more upbeat than most coffee vendors'. Dutch Bros' marketing exudes radiates youth and high energy, built around social media messaging. And when you order your drink, the staff will follow through with the same ultra-friendly approach.

And the youthful attitude carries on in the menu, too. Starbucks sells plenty of sugar-loaded coffee variants but Dutch Bros takes it to the next level. Some customers see popular Dutch Bros drinks more as a dessert than a coffee beverage. It even makes its own energy drink, with or without boba balls in at least 37 flavors.

This is a different take on the coffee culture, and it's incredibly popular. The drive-thru lines often spiral out into the street, just like Chick-fil-A does in my neck of the Floridian swamps. The high-energy service is almost a necessity for handling these long lines. Trailing revenues have soared 65% higher in two years. The location count rose from 603 to 912 over the same period.

It's the kind of high-octane growth story that inspires investor enthusiasm and sky-high valuation ratios.

Market valuation and investment potential

Dutch Bros entered the public stock market in the fall of 2021, mere weeks before the inflation panic set in. The stock soared as high as $76.25 per share in the early days, but plunged quickly when investors backed away from risky growth stocks. Today, Dutch Bros shares stand 58% below the 2021 peak.

It's still not a cheap stock by traditional value metrics. Shares are changing hands at 129 times trailing earnings -- more than enough to make value investors look elsewhere.

But Dutch Bros looks more affordable in a different light. That includes the price to earnings to growth ratio, of course, which was made to weigh the value of high-growth businesses. A ratio near 1.0 usually indicates a fair value, and very low figures point to fire sales. Dutch Bros' value stops at 0.64.

But that's not all. The stock also trades at just 15 times operating cash flows. That's lower than Starbucks at 19 times operating cash flows. Strong cash flows signify a high-quality leadership team that knows how to turn a cash profit, and the low multiple suggests that investors haven't caught on to this investor-friendly quality yet.

Where do I sign up for this low-priced growth stock?

Dutch Bros is achieving this strong growth and solid profit while Starbucks recently called in a superstar CEO to start a turnaround. There's something special in this company's business recipe, and the stock looks downright undervalued in many ways.

Whether you're into its caffeine-loaded drinks or not, Dutch Bros could be a great stock to own as the company expands its market reach. Dutch Bros has opened shop in 18 states so far, leaving plenty of map space for future exploration.

Should you invest $1,000 in Dutch Bros right now?

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.

1 Growth Stock Down 58% to Buy Right Now was originally published by The Motley Fool