This Coffee Stock Has Quietly Doubled in Just the Last 8 Months, and It Isn’t Dutch Bros or Starbucks

Black Rifle Coffee, founded in 2014 by three friends, has grown significantly since its humble beginnings as a direct-to-consumer (DTC) coffee company. The company generated nearly $400 million in revenue last year and expects to generate at least $430 million this year. However, the company’s stock market reception has been challenging, with shares starting off at $10 in 2021 through a special purpose acquisition company (SPAC). After climbing for much of March to a peak above $30 in early April, the shares consistently tumbled lower, dropping to below $3 per share late last year.

However, Black Rifle Coffee’s stock has recently risen by more than 100% over the last eight months to around $6 a share, a far better return over that time than the S&P 500 or larger coffee companies Starbucks and Dutch Bros. The company now sells most of its products in retail stores, with deals with retailers like Walmart and 7-Eleven, as well as beverage giant Keurig Dr Pepper. Walmart is the largest brick-and-mortar retail business in the country, and Keurig Dr Pepper owns some of the most popular home-brewing devices, further extending Black Rifle Coffee’s reach.

Black Rifle Coffee also started making canned ready-to-drink beverages, which are now available in more than 87,000 stores. In terms of growth rates over the last few years, Dutch Bros still takes the prize among these three coffee stocks. The company puts an extra emphasis on veterans and first responders with its corporate values and charitable giving, and set the long-term goal of hiring 10,000 veterans.

After the initial period of enthusiasm, investors seemed to give up on Black Rifle Coffee stock, dropping its price-to-sales (P/S) ratio to well below 1, a cheap valuation. However, in Q1, it posted its first quarter of positive net income since going public, with a profit of less than $2 million. Management said it expects to post a full-year profit, and investors are responding accordingly.

If Black Rifle Coffee can sustain profitable growth, it is likely worth a lot more several years from now. The company’s canned beverages are taking market share and providing some of its top-line growth, and management has made changes to manufacturing and distribution that should result in higher profit margins. Although Black Rifle Coffee is still relatively small, its brand message has enough appeal to develop a loyal customer base and can support much larger revenue.

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