Stock Spotlight – Beyond Meat

In my first post, I mentioned that one of the reasons I made this blog is to write for at least five minutes per day. While this post will be published after the day ends (and actually well into the next day, whoops), I still managed to work on my blog for five minutes on August 7. We’re still on track, albeit not by much. The reason I started this post at 11:55 p.m. is that I procrastinated doing this and other work all day, which is a topic I’ll get into another time.

Anyway, I decided the first stock I’d write about in my Stock Spotlights is Beyond Meat. The hottest stock of the year, peaking as high as 958.84% more than its IPO of $25, is a dually hot topic. So let’s get to the bottom of the burning question surrounding Beyond Meat: is it really a good investment?

Let’s start with the product itself. If you haven’t tried Beyond Meat, or if you’ve tried other vegetarian or vegan options and had bad experiences, you might be wondering: does it even taste good? I’ve tried Beyond Burgers and Sausages, and I’m a huge fan of both. I definitely recommend trying a Beyond product if you haven’t already.

Besides its taste, Beyond Meat is sustainable because it’s healthier, both for the body and the environment. While some have questioned whether or not plant-based meat options are actually better for you because they are “highly processed”, that doesn’t reveal the full picture.

While Beyond Meat products are processed in that they are altered from their original state, Beyond Burgers differ from their main competitor, Impossible Burgers, because they utilize pea protein isolate, which is easily digestible. Impossible Burgers, on the other hand, are based with soy protein, which is one of the top 8 most common allergens. The takeaway? Beyond Burgers are more widely consumable. Additionally, Beyond Burgers contain high-quality ingredients such as mung bean protein, apple extract, and pomegranate fruit powder, contrary to other processed foods that consist of lower quality ingredients. Traditional red meat has been linked to type 2 diabetes, heart disease, and stomach and bowel cancers, further illustrating the benefit of plant-based options.

Beyond Meat is also healthier for Earth, with estimates forecasting that cutting the world’s beef consumption by 70% would reduce greenhouse gas emissions by 35%. On top of that, with the world’s population continuing to grow, what if we replaced cattle farms with crops to more efficiently feed people?

Another reason I’m a Beyond bull is because of their strategic partnerships. Today (August 7), Subway announced that it had partnered with Beyond Meat to offer Beyond Meatballs in a meatball sub expected to be rolled out to 685 Subway locations across the U.S. and Canada in September 2019. Dunkin’ Brands also launched a Beyond Sausage breakfast sandwich in Manhattan in late July and has plans to expand the offering across the country. According to Yahoo, the sandwiches “appear to be flying out the door”, and Dunkin’ stock certainly benefited from the partnership. As a Bostonian, I love Dunks (as I affectionately call Dunkin’), and I’m super pumped to try this sandwich. Unfortunately, there aren’t a whole lot of Dunkin’ locations in Minnesota.

Some other notable Beyond partnerships include Blue Apron (meal kit company), Famous Dave’s, Tim Horton’s, A&W, TGI Fridays, and Carl’s Jr. Internationalizing into Canada’s A&W and Tim Horton’s chains, which also have locations in the U.S., is another value-driving play for Beyond Meat that I’m excited about.

While there’s a lot of positives surrounding Beyond Meat right now, Impossible Foods will begin selling its products in grocery stores in September to compete with Beyond Meat after getting FDA approval for its soy leghemoglobin color additive, which the FDA said was “generally recognized as safe”. Generally?

Also, Beyond’s EPS (earnings per share) came out a bit lower than expected, reporting a loss of 24 cents per share versus expectations of 8 cents per share. However, they reported revenue of $67.3 million versus expectations of $52.7 million, which means they made more than expected, but also spent more than expected. I think that’s great: they’re spending more to fund growth, which is also exemplified by their secondary stock offering of 3.25 million shares to raise $40 million to expand production efforts.

There’s one more kicker for Beyond Meat: McDonald’s. An analyst predicted that their stock could jump as much as 30% with a partnership with the world’s largest food chain, and there’s reason for optimism here too. McDonald’s former CEO and COO, Donald Thompson, is on Beyond’s board, and in their latest earnings call, McDonald’s said they are “paying close attention to the plant-based protein trend”. With Beyond’s stock dipping back into the $160s as of the writing of this post, it might be the right time to buy again.

Whichever plant-based meat option McDonald’s chooses will have a major impact on the meat substitute market. If Beyond closes the deal, and it lines up pretty well on paper, it will be a huge step in the right direction for them. If McDonald’s goes in another direction, well, that wouldn’t be too hot for the hottest stock of 2019.

But I think Beyond Meat is here to stay, and I like where they’re headed. They’re expanding their product line, ramping up production, and securing high-value partnerships with major brands around the world. Their products are (generally, there’s that word again) healthier than regular meat, and in the long-run, they're more sustainable for the environment too. As a great man once said, “To infinity, and Beyond (Meat)”!