How do you know that the vegan movement is catching on worldwide? Vegan stocks to buy are becoming more common.
McDonald’s (NYSE:MCD) launched the McVegan burger in Sweden and Finland last fall on a trial basis. The trial was so successful; the Golden Arches made it a permanent fixture at Scandinavian locations.
“Just the fact that there is a permanent @McDonalds item called the McVegan boggles my mind and makes me feel like the world is truly evolving,” tweeted FindingVegan, a California recipe site, at the time of its launch last December.
Veganism has become mainstream, and that’s created some exciting investment opportunities to ride the vegan wave.
It’s not only fast food restaurants like McDonald’s that are capturing a piece of the vegan movement. Companies in other sectors of the economy are creating products and services to meet the needs of this growing market.
To make sure you don’t miss out on this burgeoning trend, I’ve put together a diversified portfolio of 7 stocks to buy to ride the vegan wave.
Vegan Stocks to Buy: Tyson Foods (TSN)
How is it that the first company on my list of stocks to buy is Tyson Foods (NYSE:TSN), a company best known for its chicken products?
Well, according to CEO Tom Hayes, the customer is moving in the direction of plant-based foods, so it only makes good business sense to get on the bandwagon.
“Just as you see many different electric car models on the market right now, there won’t be a silver bullet — customers love choice,” Tyson stated in an August interview. “If we can grow the meat without the animal, why wouldn’t we?”
In 2016, Tyson made a 5% investment in Beyond Meat, the company behind the burger that’s taken Canada and the U.S. by storm. It upped its stake at the end of 2017 as part of a $55 million investment round by the California-based company.
“We got attacked when we signed a deal with Tyson. People said I personally have blood on my hands,” said Beyond Meat CEO Ethan Brown at the time. “Tyson took a big risk, too. I mean Hayes didn’t get any love letters when he backed us. But I’d much rather try to get things done than throw stones, and the people at Tyson know how to move the needle.”
The fact is, 70% of the people who eat Beyond Meat burgers are meat eaters. Sustainable foods are the wave of the future.
Vegan Stocks to Buy: Hain Celestial (HAIN)
Perhaps the original vegan-friendly company is Hain Celestial Group (NASDAQ:HAIN). But shareholders have not had an easy go it the last three years. HAIN has lost 60% of its market value from its all-time highs in August 2015.
Unfortunately, Hain went on an ill-advised acquisition spree that created a business with too many smaller brands that failed to gain enough traction with consumers, while simultaneously facing increased competition from the large food conglomerates interested in grabbing some of the company’s organic market share.
Engaged Capital, an activist investor with 9.9% of the company stock, pushed to remove founder Irwin Simon as CEO and get himself on the board.
Simon stepped down in June. Engaged Capital’s founder, Glenn Welling, is now Hain’s non-executive chairman. A search for Simon’s replacement is currently underway.
Because Hain has its hands in all kinds of segments of the organic food industry, it has itself become a difficult acquisition target because of its over-diversification.
I’d keep an eye on who Hain hires to replace Simon as CEO. The right person could help re-energize a stock that’s lost its way.
Vegan Stocks to Buy: Apple (AAPL)
The vegan movement’s become so big that it’s attracted the attention of the investment community. Soon, there will be an actual ETF to address this market.
The U.S. Vegan Climate ETF is a passive fund developed by Beyond Advisors. The Europe-based company will track the performance of the U.S. Vegan Climate Index, a collection of 300 stocks whose businesses do not harm animals in any way or participate in other environmentally and socially abusive practices.
Screening out these companies from the Selective U.S. Large Cap Index, approximately 40% of the index is excluded from the U.S. Vegan Climate Index.
“For the first time that proportion of the U.S. stock market whose business models harm animals and the environment can be identified,” said Beyond Advisors analyst Claire Smith in May at the launch of the index. “With reports suggesting 6% of the US population identify as vegan, Beyond Advisors anticipates demand for financial products based on this index to serve the requirements of vegans and environmentalists who do not want their money supporting businesses whose activities they oppose.”
Apple (NASDAQ:AAPL) is the largest holding of the index with a 4.08% weighting. If you support the vegan lifestyle and want a better way to own Apple, the soon-to-be-launched ETF could be a good solution.
Vegan Stocks to Buy: United Natural Foods (UNFI)
If you’re a United Natural Foods (NASDAQ:UNFI) shareholder, I feel your pain.
The country’s largest wholesale distributor of healthier foods — it delivers more than 110,000 products to over 43,000 customers across the U.S. and Canada — has seen its stock make four significant corrections in 2018, resulting in a 40% decline year to date through October 2.
Its latest correction in late September came after disappointing margins in its Q4 2018 earnings report.
Fear not. United Natural Foods might be down, but it’s not out.
In late July, it announced that it would pay $2.9 billion to acquire Supervalu (NYSE:SVU). The acquisition helps bulk up its wholesale business — it will sell Supervalu’s retail stores — the combined entity becoming the second-largest food wholesaler in the U.S. with annual revenues of more than $20 billion.
Whole Foods accounts for 33% of UNFI’s current revenue. It can cut ties with UNFI in 2025 at the end of their distribution contract. Management, looking to broaden its customer base in case Amazon (NASDAQ:AMZN) decides to go it alone on the distribution front, made a smart buy in my opinion.
Time will tell if it’s enough to protect against the potential loss of a third of its business in seven years time.
In the meantime, UNFI stock hasn’t traded this low since 2010. Value investors ought to be chomping at the bit.
Vegan Stocks to Buy: Amazon (AMZN)
It’s been a whirlwind 13 months since Amazon stunned the world buying Whole Foods for $13.7 billion.
Prognosticators of all types came out of the woodwork predicting the many changes Jeff Bezos would implement at the healthy foods grocery-store chain.
One of the more sensible changes is expanding Whole Foods’ delivery network. In late September, Amazon launched delivery services in 10 more cities including Detroit, Orlando, and Tulsa. Whole Foods now delivers in 48 cities across the U.S.
Not surprisingly, the predicted drop in prices at Whole Foods, has yet to materialize.
“While deeper promotional pricing on key items, incremental savings… and increased convenience for Prime Members in the first year under Amazon ownership have caught our eye as consumers, the reality is that Whole Foods pricing on a broad basket has remained largely unchanged,” stated a recent report from Gordon Haskett Research Advisors.
According to the report, $400 spent on a basket of food at Whole Foods a year ago, now costs $398.50, producing a whopping $1.50 in savings.
If you’re an Amazon investor, this is excellent news because the money to pay for a $15 minimum wage has to come from somewhere.
Vegan Stocks to Buy: Danone (DANOY)
On September 18, Danone (OTCMKTS:DANOY) announced that it along with some other participants in the Canadian plant-based food industry such as Hain Celestial had banded together to form the Plant-Based Foods of Canada (PBFA) organization, a group dedicated to furthering healthier foods in Canada.
That’s great news for people like myself who live in Canada and eat plant-based foods almost exclusively (I do eat fish).
“In the next five to 10 years, we are going to see rapid growth in the interest and consumption of plant-based foods. It’s happening already,” said Hain Celestial Canada CEO Beena Goldenberg in the September press release. “As the industry continues to move into the mainstream, it’s critical that it has a voice to accurately represent it and help shape the direction it takes for the benefit of all Canadians.”
Canada often is slow to adapt to certain trends. The launch demonstrates the growth of plant-based foods around the world.
For Danone, this means delivering plant-based yogurt alternatives — growing at 55% annually — to consumers everywhere.
With the acquisition of WhiteWave in 2017, Danone now controls 70% of the global plant-based yogurt category.
Who says plant-based foods aren’t profitable?
Vegan Stocks to Buy: Copper Branch
While this article focuses on publicly-traded companies, I had to throw in a private company from Montreal that’s taking the plant-based food industry by storm.
Copper Branch, founded in 2014 by fast-food industry veteran Rio Infantino, is the largest vegan restaurant chain in the world with 30 locations in Canada and plans for 230 more around the world by the end of 2020.
Infantino started the franchise restaurant after getting tired of serving fast food to customers that were bad for them.
In November, it will open its first U.S. location in New York City.
“New York City was a clear choice for our first U.S. location as it provides great visibility for the brand and is one of the world’s most recognized active and forward-thinking cities,” Infantino said in a statement. “Like our brand ethos, NYC epitomizes strong roots while simultaneously being dynamic and embracing the future.”
If you’re interested in owning a franchise, I’d check Copper Branch out.
As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.