Our friends at Investor's Business Daily recently published an article about Beyond Meat, one of the leading vegan meat providers in the US. Should you buy the stock? Let's see what they recommend.
Wait, meat and no animals?
Yes, vegetarianism is a thing now, in case you have not heard. But not only now: it always existed. Believe it or not, our ancestors were primarily vegetarians and not the meat hunters we picture them as. Vegetarianism really gained in popularity and grew in the consciousness of people these past decades. In 2019, it was estimated that around 8% of the world population was vegetarian.
And this number is growing, as people are more and more inclined to avoid meat, disgusted by the sometimes-extreme ways of mass meat production. For example, animal agriculture is sucking up 20-33% of the water consumption worldwide – between 5’000 and 20’000 litters of water are required to produce 1kg of meat –, 6 millions animals are killed for human consumption every hour – pigs that should live between 15 and 20 years are slaughtered after 6 months spent in a cage so small they can barely move. Our meat hunger is also responsible for 18% of climate change, for around 91% of the destruction of the Amazon forest and let us not even talk about the most horrific animal treatments.
Still want to eat meat ? Sure you do, because it tastes great and you are used to it, but what about an alternative ? Many customers, disgusted by such a damaging production method, decide to change their diet to vegetarianism or even veganism. But is it not hard to stop eating steaks and nuggets altogether when you have been appreciating them for a lifetime? This is where Beyond Meat comes in.
Beyond Meat: one of the best alternatives to steaks
Founded a little more than 10 years ago, Beyond Meat is now one of the leaders in the production of “fake meat”. The company’s product line has found its place in over 112’000 retail and food service location, and is distributed in over 80 countries.
The starting question for the company was: “why do we need animal to create meat?” It is true that we feed plants to animals in order to be able to appreciate our delicious steak, but would it be possible to skip the animal part, which is the source of so much pollution and suffering? Turns out that you can. Not only do they promise to improve human health, have a better impact on the environment and improve animal welfare, they also use 99% less water, 46% less energy and occupy 93% less land. Not bad.
An aggressive expansion
Although the company was initially by the pandemic as many other businesses, they did not take too long to get back up and were quick to beat expected sales this summer. Their agenda is focused in multiplying partnerships in the US, entering over 2’400 Walmart stores and offering continuing trials at various fast food chains such as KFC or Dunkin’ Donuts.
They are now playing aggressively to expand their product offering to new retail stores and to continue expanding overseas. They recently announced that they would build production facilities in China, making it the first foreign vegan meat company to establish itself in the country. They already started signing partnerships with multiple restaurants and retail stores such as Yum China and Alibaba’s Freshippo’s grocery stores."We believe the magnitude of the opportunity in Asia merits significant investments, and we will continue to proceed with a sense of urgency appropriate for the challenge and opportunity alike," said Ethan Brown, Beyond Meat’s CEO.
"Beyond may emerge as a net beneficiary of the pandemic in the near term due to strong demand in (the) retail channel (48% of sales) and in the long term due to rising consumer interest in healthier foods," Credit Suisse analyst Robert Moskow wrote in a June report. Demand for more healthy food is indeed rising. According to Barclays analysts, sales of vegan meat could reach $140 billion in the next 10 years.
About the stock
In May 2019, the stock became public and surged 859% in only a few months. However, this outstanding success quickly quieted down as the stock lost 80% of its value at some point.
In terms of composite ratings – which analyses earnings and sales growth, profit margins, return on equity, relative stock price and other performance index –, Beyond places itself ahead of other food retail peers such as Hormel Foods and Vital Farms, holding the two other seats of the IBD’s index podium. While this is encouraging, the stock is still only at the 146th position of the IBD’s out of the 197 companies tracked by the index.
Beyond Meat stock over the last year (Source: investing.com)
Although the long-term outlook is compelling and the company seems to be doing well in such a troubled market, IBD recommends to not buy the stock immediately. However, I would recommend keeping a good eye on this company and growing market, as it may surprise us in a couple years.
Beans and Greens: The History of Vegetarianism, in History
15 Ugly Facts The Meat Industry Doesn’t Want You To Know, in Buzz Worthy
Is BYND Stock A Buy Right Now? Here's What Beyond Meat Earnings, Chart Show, in Investor's Business Daily