Right from the get-go, the appeal for Black Rifle Coffee Company (NYSE:BRCC) is apparent: veteran-owned, family friendly, pro-conservative and generally friendly to the movement that put former President Donald J. Trump in office. If capturing consumer loyalty was all that mattered in the business world, you should sign yourself up to some BRCC stock in your portfolio.
Despite a huge plummeting of its share price for the Apr. 12 session, BRCC stock has benefitted from rousing support among fans of the Black Rifle ethos. On a year-to-date basis, it is up 76.8%, a true outlier compared to the benchmark indices, which, let’s be fair, have been struggling for traction.
However, it may be wise to consider taking some profits off the table if you happen to be an early investor. For one thing, a growing number of research analysts have started to soften their outlook for BRCC stock. Obviously, analyst ratings aren’t the end-all be-all for Wall Street-related endeavors. And not all experts have the same take on BRCC stock. Still, it is something to keep in mind.
More importantly, though, while Black Rifle may have received early support for its conservative-leaning brand, ideology has a limit if it starts impinging the wallet. That is according to McKinsey & Company, which noted that consumers are willing to pay for sustainable products. “But as the premium increases, the willingness to pay melts away.”
Then, you must factor in the inflation problem. With soaring prices continuing to pressure average households, suddenly, the ability — let alone the willingness — to pay double-digit premiums for coffee affiliated with certain ideals will likely start to slip away.
Hardcore Black Rifle fans wouldn’t want to support another cause. But if there is cheaper coffee out there, that might be where the buck stops.
On the date of publication, Josh Enomoto 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.