- Black Rifle Coffee (BRCC) stock is much more than just a meme stock.
- Recent earnings and price chart action point to a classic growth story.
- A “buy what you use” strategy and hedged BRCC stock position is attractive moving forward.
Black Rifle Coffee (NYSE:BRCC) stock avoided an attack from recent bears-on-the-lam who successfully shot down many meme and growth stocks on Wednesday. Larger losses in names ranging from Reddit favorite AMC (NYSE:AMC) and GameStop (NYSE:GME) or higher multiple growth plays Shopify (NYSE:SHOP) and Snowflake (NYSE:SNOW) were ubiquitous.
Yet BRCC stock walked away unscathed with a closing print of $20.12 and up 0.45% on the session. So, what gives?
There wasn’t news to account for the entrenched boots-to-the-ground price action from Black Rifle’s investors. Meanwhile, BRCC avoided a blanket “profit-taking” excuse prompted by a brief interest rate inversion and two weeks of hefty broader market gains that helped drive shares higher by about 25%.
So again, what’s up?
As I’ll explore below, BRCC stock is simply a well-served brew of supportive factors both off and on the price chart to respect. And for some investors, Black Rifle is undoubtedly a name with strong incentives to buy.
|BRCC||Black Rifle Coffee||$20.12|
Business Is Good for Black Rifle Coffee
Black Rifle Coffee is a coffee roaster operation that’s building a niche market around a specific political demographic. There’s nothing wrong with that. In fact, given the politically contentious demographic is widely underrepresented on corporations’ wish lists of favored groups to pander to, it could turn into some very smart business calculus.
Also, BRCC’s commitment to helping military vets, first responders, among several other key groups is true to the CEO’s roots as a former Green Beret.
Importantly, with strong gear branding such as its “Coffee, or Die” t-shirts and trucker caps, word is getting out; shops in red states are opening their doors and revenues are piling up in BRCC’s coffers.
The BRCC Stock Chart Is Well Brewed
Source: Charts by TradingView
Could Black Rifle grow as large as Starbucks (NYSE:SBUX)? I’d say it’s unlikely. But it would be unwise to discount BRCC’s fervent base, which helped it grow sales 20% year-over-year. This strong customer base was also instrumental to the company boosting its fiscal year revenue outlook.
Furthermore, with a similar price multiple to SBUX, a smaller mid-cap valuation and more than $200 million in cash from its recent special-purpose acquisition company (SPAC) IPO, BRCC is set to grow nicely as it builds out its brick-and-mortar presence and expands relationships with outfits like Cabela’s and Walmart (NYSE:WMT).
On the technical side of things, BRCC stock’s relative and absolute strength on Wednesday established day four of a classic handle pattern within a larger corrective cup-shaped base.
For growth traders, the formation is a sacred cow offering consistent profits to bullish buyers using a breakout entry in conjunction with a disciplined stop-loss of 7% to 8%.
Given a broader market that has signaled a follow-through day and one that is also supportive of buying handle breakouts, BRCC stock has a lot working in its favor beyond its notorious apish base, which could always take matters into its own hands.
As such, if Black Rifle shares trade 10 cents above the handle’s high of $20.80, BRCC should be ripe for a fairly quick and profitable purchase.
The Smart Way to Buy Black Rifle Coffee
For some investors, BRCC offers an attractive product and persona. It also have positive qualities off and on the price chart which are worth buying into. However, as detailed above, I’d still recommend waiting for a classic breakout to trigger before setting any sights on positioning.
If that day does arrive within the next couple weeks and BRCC’s handle has maintained its shape above $18.75 and the cup’s 50% retracement level, remember to be a first responder and buy BRCC stock smartly.
Equally critical, take profits like a pro when offered and don’t forget to cut losses methodically to keep ammo for the next mission beyond Black Rifle Coffee.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.