Investors Should Buy Beyond Meat Stock Only If Shares Dip

Despite falling 50% below its 52-week high, investors bullish on Beyond Meat (NASDAQ:BYND) are still an optimistic bunch. Bears have a 21.4% short float position on the stock, betting that the artificial meat supplier is not just a fad.

Is it Time to Come Back for Seconds on Beyond Meat Stock?

Source: Sundry Photography /

Having posted an earnings per share loss cumulatively in the last 12 months, the company is still a leading disruptor. The global meat category has a market size of $1.4 trillion. And the U.S. meat category is a $270 billion opportunity.

Beyond Meat stock is a growth investing opportunity because of its extraordinary revenue growth. The rollout of the product as a source of protein for people continues. That suggests the company is not a short-term fad.

Beyond Meat Is Disrupting the Restaurant Business

Beyond Meat posted year-over-year revenue growing 170% to $87.9 million from 2017 to 2018. That growth accelerated to 253% for the year-to-date 2019, at $230 million in revenue. Since its IPO, Beyond Meat has 58,000 worldwide points of distribution. And as a public company, brand awareness continues to increase. The mere mention of the company as a supplier for McDonald’s (NYSE:MCD) or Tim Hortons, owned by Restaurant Brands (NYSE:QSR) only increases its brand awareness. But even after Tim Hortons kicked Beyond Meat from the menu at some locations, Beyond Meat stock is on the mend.

Shares closed recently at $116.44, up from the $80 support established between November and December 2019. Just last week, the company entered France with Casino Group Supermarkets. By expanding its reach and diversifying its geographic coverage, the company may post better quarterly results.

On Jan. 29, KFC said it would expand its test of plant-based Beyond Fried Chicken. KFC had nearly 23,000 locations. With that reach, the stock’s revenue growth potential is well into the billions. The ever-expanding demand for chicken in sandwiches will lift the plant-based market, with Beyond Meat leading the way.

Supply Growth

On Jan. 14, Beyond Meat struck a multi-year protein supply deal with Roquette. Getting the global leader in plant-based ingredients is a positive catalyst for the company. This will enable the company to supply more Beyond Burgers at retail outlets. The firm rolled out 24,000 retail outlets in the quarter ended September 2019. Having a supply agreement of this size will allow Beyond Meat to sustain its momentum, especially in the U.S. retail channels.

Investors may forecast a drop in the cost of goods sold (COGS) per pound. On the conference call, the company said that COGS fell by 25%. At $3.69 a pound, it may continue reducing costs. In a 10-year discounted cash flow model (revenue exit), assume a terminal revenue multiple of 29 times. This would imply that the stock has a fair value of almost $200. These are the full assumptions:

Metrics Range Conclusion
Discount Rate 10.5%-12% 11%
Terminal Revenue Multiple 28.1x-29.1x 28.6x
Fair Value $174.70-$206.32 $193.97
Upside 50%-77.2% 66.6%


The only big risk with Beyond Meat stock is the value score, which pales compared to its competitors.

Source: Chart by Stock Rover

The high short float may lead to a squeeze that lifts the stock. But if revenue growth slows, Beyond Meat stock will fall. Growth investors may not want to have a full investment position in the stock at this time. Accumulate the stock only if it dips again.

As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.

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