Legal mumbo-jumbo, i.e. Disclaimer — The below references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. For more information visit my company’s Legal Disclaimer.
I emailed our family financial advisor on Friday, June 7th to suggest that we purchase shares in Beyond Meat. At the time, the company’s shares had risen to about $127/share following an IPO, on May 2nd, that saw the company open at a mere $25/share.
At the market opening this morning, following an over-night downgrade by JP Morgan that pegged the price target at $120, shares of BYND are down about -15% to $142.
For the record, even with such a dip, that means our investment would have still have been up $15/share. The stock could continue to slide some but I’m long (i.e. interested in holding the stock, not trading it quickly for a profit) the potential of this company.
Why I’m long the potential of Beyond Meat
There is no question that there is a lot of hype around this stock right now. Certainly, some of that hype is driving up the stock price. The company is still showing a loss at this stage. But there is no denying that the company has a lot going for it.
Net sales are crushing it
What I suspect is a large upward driver of the stock price, is that the company beat Wall Street expectations in their most recent quarterly report. One of the metrics that out-performed analyst estimates was revenue. Net sales rose 215% in the quarter.
Plant-based foods are in demand
I am intimately aware of the interest and momentum that the plant-based industry is seeing. A few months ago I completed some market research for a client that was developing a plant-based yogurt solution. For example, at the time of my research, the plant-based foods industry was seeing a growth rate of 8.1% compared to a decline of -.2% across all other foods in the same channel. Additionally, I have been a distributor for a plant-based, whole foods company for over five years now and the demand for their products has steadily been increasing as more and more people seek healthier alternatives.
Distribution opportunities ahead
When I was analyzing the company I noticed that they have a decent distribution list already. But, I also noticed a lot of potential distributors in my part of the country, and others, that they don’t yet have. Specialty stores like Whole Foods, Fresh Market, Earthfare and larger grocery chains like Kroger. If Beyond Meat begins to increase their distribution, and I believe they will, then revenues will continue to shoot up.
My goal is always to be super transparent. The trade I mentioned above did not occur. However, I did make a minor investment in Beyond Meat through a personal account that is not managed by a financial advisor.
I’m not telling you that this stock is a home run. What I am saying is that you should take a hard look at it. Not as a day-trading activity for a quick profit. For the reasons above and others (first-mover advantage), I truly believe this stock (and the plant-based category in general) have a lot of upside ahead of them.
As always, you should do your own analysis and make your own investment decisions outside of my opinions and, of course, consider working with your financial advisor.