3 Great American Growth Stocks to Buy This July

Key Points

• With a profitable streaming business and the upcoming launch of the flagship ESPN app, Disney looks poised for more growth.

• e.l.f. Beauty is gaining market share despite the tough operating environment.

• Dutch Bros is early in its journey of opening more drive-thru coffee shops in all 50 states.

Regularly buying shares of growing businesses through the stock market is one of the best ways to build wealth, and it's often the case that the brands you are most familiar with can make rewarding investments. For this Independence Day, you might consider investing in these U.S.-based companies.

Walt Disney (NYSE: DIS), e.l.f. Beauty (NYSE: ELF), and Dutch Bros (NYSE: BROS) were recently selected by three Fool.com contributors as timely buys this month. Read on for why they believe these stocks could ignite your portfolio.

Image source: Getty Images.

A great American comeback

Jeremy Bowman (Walt Disney): Few brands are as closely associated with American culture as Disney. For a century now, Disney has been a top name in family entertainment around the world, from Mickey Mouse to the latest live-action Lilo & Stitch remake.

However, the stock has struggled over the last decade, as Disney was slow to transition to the streaming era, preferring to milk its cable cash cow empire for every last drop. After a post-pandemic hangover, the business now appears to be on better footing, and its streaming services are profitable and growing.

The company expects double-digit percent operating income growth in the entertainment segment this fiscal year, which includes a headwind in linear networks, and 18% operating income growth in sports for the current fiscal year. Through the first half of the current fiscal year, adjusted earnings per share are up 32% year over year to $3.22, and operating income in entertainment jumped 79% to $2.96 billion. In the direct-to-consumer segment, or streaming, it flipped a $91 million loss to a $629 million profit.

As Netflix has shown, there is huge profit potential in streaming, and Disney, with now full ownership of Hulu, has the content library to build a similar profit stream in streaming.

Additionally, Disney is prepping to launch its flagship ESPN streaming app this fall, making the full ESPN package available outside of cable TV for the first time. That's likely to give the company a boost in revenue and profits as it reaches a generation of cord-cutters that it has neglected.

Its theme park business continues to crank out cash, meanwhile, and the company plans to add a new park in Dubai. Altogether, Disney stock looks poised to rip higher over the coming years.

Young shoppers are driving growth

Jennifer Saibil (e.l.f. Beauty): e.l.f. Beauty is taking over as the preferred mass cosmetics brand in the U.S., and it continues to report growth despite a pressured macroeconomy. While its competitors lose market share, e.l.f. continues to gain, becoming more popular and setting itself up for even stronger performance under better conditions.

It's doing everything right to appeal to its core, younger clientele, branding itself with their values and being on social media, where they are. It positions itself as an eco-conscious business, it has marketing campaigns that champion diversity and empowering women, and it has released several multimedia specials featuring well-known celebrities. These efforts are resonating with e.l.f. Beauty's young customers, and its low prices don't hurt, either.

It had reported fantastic growth when inflation first skyrocketed and shoppers switched to cheaper brands, and that was a setup for slowing growth in the aftermath, which is what's happening now. But after this lumpy period, e.l.f. should have steadier growth for many years.

Even now, it's demonstrating growth in a tough environment. It has the No. 1 spot in color cosmetics unit share, gaining 23% in fiscal 2025, while much of the competition is declining in unit share. It's No. 2 in dollar share, but it increased 24% year over year to slide into second place, and first-place Maybelline (owned by L'Oreal) declined 5%.

The company has many growth drivers. Although it's the top U.S. mass brand in color cosmetics unit share, it has a ways to go in skincare, which is where it's investing. It's inking new deals with more stores, and it recently acquired popular cosmetics brand Rhode, which will be a step toward the premium market.

e.l.f. stock is trading down 37% over the past year. The market's been disappointed in its slowdown, and it had become very expensive, setting itself up for a fall. But it's starting to climb again as investors recognize the opportunity, and at 28 times forward one-year earnings, it looks like a great time to buy for the forward-thinking investor.

This Oregon-based coffee chain is expanding nationwide

John Ballard (Dutch Bros): Dutch Bros is an emerging powerhouse in the drive-thru coffee space. The business was started in 1992 by two brothers in Oregon, and as of March 31, it had 1,012 locations in 18 states. Since most states don't yet have a Dutch Bros store, the stock offers excellent return prospects based on growth potential.

Management is targeting 2,029 shops by 2029, and it continues to march toward that target. Revenue grew 29% year over year last quarter, driven by 30 new shop openings across 11 states.

Importantly, it reported same-shop sales growth of 4.7% in Q1, which is solid considering Starbucks continues to report declining sales. Dutch Bros is seeing positive growth signals that its brand is resonating in a competitive market for coffee.

However, coffee only makes up roughly half of its menu. Dutch Bros also offers lemonades, teas, smoothies, and energy drinks, and it's currently testing food at select locations.

It's also important to see a growing restaurant execute its growth strategy in a profitable manner. On that note, Dutch Bros is profitable, reporting net income of $22.5 million last quarter, up from $16 million in the year-ago quarter. A successful food pilot test indicates potential to capture incremental beverage sales and expand margins.

The stock has climbed over 50% in the past year, but it still trades at a price-to-sales multiple of 5.5, which is average for a fast-growing restaurant chain. This is a promising growth story that could make a very rewarding investment as Dutch Bros expands to all 50 states.

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Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has positions in Netflix, Starbucks, and Walt Disney. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Starbucks, Walt Disney, and e.l.f. Beauty. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.