The shares of Neptune Wellness Solutions (NASDAQ:NEPT) surged more than 40% in pre-market activity on Wednesday after the Canadian lifestyle brand struck a deal to buy a controlling interest in Sprout Foods. NEPT stock closed Tuesday up 12.5%.
Sprout is an organic plant-based baby food and toddler snack company with about $28 million in annual sales. Founded in 2008, the company claims to be one of the fastest-growing organic brands on Amazon (NASDAQ:AMZN).
The company is also a portfolio investment of Morgan Stanley Expansion Capital. Several of that firm’s investment funds will become NEPT stock holders, according to Neptune’s announcement.
NEPT Stock Poised As Plant-Based Food Player
As the race to dominate meat substitutes heats up, plant-based stocks are becoming an investor favorite. There are a couple of reasons for this increasing interest in plant-based meat. One, demand for meat and dairy substitutes is on the rise due to increasing health concerns over animal welfare and the environment. Second, the novel coronavirus pandemic revealed the flaws in the supply chain of meat production. After many meat plants were forced to shut their doors, fake meat stocks had a huge opportunity to capitalize on demand.
At the same time, Neptune is also riding the cannabis wave as it develops new consumer brands based on cannabinoids and plant-based ingredients.
Product Niche Growing at 5X Rate
InvestorPlace analyst Luke Lango last month highlighted the segment’s potential, noting that plant-based food sales have been outpacing animal-based food sales by about 5X for several years now, with that gap only widening every year.
“There are a great many reasons why consumers are going plant-based, and that’s partly why this trend is so pervasive. It’s not just the tree-huggers, or the animal rights activists, or the super athletes or the trendsetters who are going vegan,” he wrote. “Plant-based diets will go from niche in 2020, to everywhere by 2030. As they do, plant food stocks will be some of the biggest winners on Wall Street this decade.”
While NEPT stock is one way to play the momentum as plant-based diets go from niche to wide adoption by 2030, other opportunities can be found in Canadian plant-meat maker The Very Good Food Company (OTCMKTS:VRYYF), plant infant nutrition pioneer Else Nutrition (OTCMKTS:BABYF) and plant protein platform Burcon NutraScience (OTCMKTS:BUROF).
As well, take a look at frozen plant foods company Tattooed Chef (NASDAQ:TTCF). InvestorPlace analyst Louis Navellier on Tuesday recommended the shares, noting that, “You don’t have to eat a veggie diet to appreciate the value proposition of TTCF stock.”
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.