Many years ago, the concept of vegan stocks didn’t really tickle investors’ fancy. If I may be blunt, eating meat has been a dominant image in the American zeitgeist for a long time. With a massive ranching industry and a lingering image of the red meat eating American male, eating red meat has been tied to Americana. With many Americans scoffing the idea of imitation or plant based meat, vegan stocks have never been in vogue. My, how times have changed.
The buzz about vegan stocks can be traced to a number of paradigm shifts. At the core is a new train of thought from many Americans to be more conscious of their food sources. It can be all, one or a combination of ethical, environmental and sustainable reasons to cut back on meat as a source of protein. While we can talk all day about this dynamic’s broader implications, for vegan stocks, the underlying product has finally been divorced from unfavorable frameworks.
Even better, consumers today are concerned about holistic sustainability. Indeed, a recent study demonstrated that “79% of millennial employees are loyal to companies that care about their effect on society.” And that’s the beauty of vegan stocks. It’s not just that society is changing and becoming much more welcoming toward “green” food. Rather, this is a financial opportunity for companies to serve this burgeoning consumer demand.
To be cynical, corporations probably don’t care about social developments, only that they can profit from them. Well, plant-based food and beverages represent a major source of potential revenue. If millennials feel so strongly about sustainability, you can bet that Generation Z feels the same way, if not stronger. Therefore, investors should consider adding these vegan stocks to their portfolio.
- Kroger (NYSE:KR)
- Costco (NASDAQ:COST)
- Target (NYSE:TGT)
- Kellogg (NYSE:K)
- Beyond Meat (NASDAQ:BYND)
- SunOpta (NASDAQ:STKL)
- Very Good Food Company (OTCMKTS:VRYYF)
As you can see from the list above, the sustainable food industry features a mix of well-established blue-chip names along with newer enterprises. There’s room for everybody with vegan stocks, even if you’re not personally on board with the dietary movement.
Vegan Stocks: Kroger (KR)
Though Kroger doesn’t immediately strike one as an investment in vegan stocks, it’s one of the major organizations that’s pivoting toward the plant-based food and beverage industry through its Simple Truth store brand. Historically, store brands have a poor reputation of being cheap and poorly tasting substitutes for the real thing. But that’s definitely not the case for Simple Truth.
For quite the longest time, I’ve been a skeptic of plant-based meat. That comes from eating animal protein throughout my life and the general unwillingness to try something new. Well, I decided to give Kroger’s “fake meat” products a try and I must say, I was pleasantly surprised. The industry has some work to do to get the authenticity just right but it’s at least 80% there in my opinion.
Further bolstering KR stock is that going vegan is the most ethical approach. That came into play during the novel coronavirus pandemic, when the meat processing industry cratered during the initial onslaught of Covid-19. Sadly, this forced many farmers to euthanize their livestock.
Now, KR stock isn’t going to change its business model overnight. But through Simple Truth, it’s making a critically important step.
Another company that you normally don’t associate with vegan stocks, Costco if anything is an opportunist. Wherever the money is, whatever the consumer wants, whether that’s 800 gallons of mayonnaise or a well-priced casket, if you decide to incorporate the former into your diet, Costco will find some way to deliver.
Naturally, with greater interest and demand for vegan stocks, the warehouse giant started offering various plant-based products. Here, Costco’s core business model of bulk pricing should serve consumers well. One of the main problems with alternative meat is that it’s expensive relative to real meat. This has to do with the traditional industry’s superior economy of scale. But through Costco, that narrative can gradually improve for vegan players as a whole.
Plus, this is COST stock that we’re talking about. According to a 2019 CNBC report, the average household income of a Costco member was $92,236. This will be particularly important as we navigate the new normal. With the economy still shaky, it’s important for your portfolio to be levered to affluent customers, who are more insulated from financial shocks.
Compared to other big-box retailers, Target has performed very well. On a year-to-date basis, TGT stock is up 16%. Compare that to Walmart (NYSE:WMT), which is down nearly 4% over the same frame. Further, TGT enjoyed a blistering performance over the trailing year, up 90%. Wally World? You’re looking at a pedestrian 7%.
But is the retailer with the bullseye logo a viable investment among vegan stocks? You might not think it at first. However, Target’s in-store brand, Good & Gather, has gained serious momentum with its customers (well, “guests” using the company’s lingo). Sure enough, Good & Gather has various plant-based meat products which are attractively priced, relatively speaking.
I add that caveat because admittedly, it’s on the expensive side. For instance, a Good & Gather 16-ounce ground meat package costs $7.49 at time of writing. Technically, you can probably find an equivalent-size, real meat product for about half the cost.
The question is, do you really want to consider the health implications of poor quality meat? Nowadays, consumers are watching what they eat, suggesting Covid-19 may have imparted a paradigm shift in our diet. That might bode well for TGT and other vegan stocks.
Perhaps best known for its cereal and breakfast brands, including Rice Krispies, Froot Loops and Special K, Kellogg is a blue chip that doesn’t get the credit it deserves for sustainability. Indeed, the company has been promoting plant-based foods before the trend became popularized in the media and mainstream culture.
First, take a look at its cereal brands. From All-Bran to Apple Jacks and the classic Kellogg’s Corn Flakes, Kellogg offers a wide range of vegan breakfast options. Some of them are even gluten-free for good measure. Sure, it might not be the sexiest inclusion among vegan stocks but K stock is a reliable investment for the long haul.
Second, the iconic food company has long been a producer of vegan meat with its MorningStar Farms subsidiary. Known for its veggie burgers, MorningStar Farms also wins out in the pricing department, offering a lot more for a lot less.
Finally, this subsidiary is truly driving home the vegan message with its premium plant-based brand Incogmeato. I mean, let’s give credit to the marketing team that came up with that name – very creative indeed! And while I haven’t tried it myself, it certainly looks delicious. K stock is one to watch if you care about our food supply chain sustainability.
Beyond Meat (BYND)
The one that started it all, no discussion about vegan stocks is complete without mentioning Beyond Meat. Before you fire off an angry email to the editor, I freely concede that I’ve been skeptical about BYND stock. So I’m no “hero” regarding this issue. But if I’m being completely honest, I’m still not wholly convinced with its shares.
As you can imagine, competition is really heating up in the plant-based food and beverage market. According to market research firm ReportLinker, the plant-based meat market in 2020 was approximately worth $4.3 billion. By 2025, the sector could hit $8.3 billion for a compound annual growth rate (CAGR) of 14%.
With its first(ish)-to-market advantage – to be clear, plant-based meat has been around for a long time – Beyond Meat is a formidable player. Plus, it could stay that way. However, its key rival Impossible Foods is planning an initial public offering, which could value the company at around $10 billion.
Also, BYND stock has been rangebound. Nevertheless, shares are currently offered at a discount relative to their February 2021 highs. If you really believe in this sector, you may want to take a nibble here.
One of the most comprehensive names among vegan stocks, SunOpta is more of a purpose-driven movement rather than a profit-seeking corporation. Don’t get me wrong – STKL stock has certainly proved its viability. On a YTD basis, shares are up 6%. Over the trailing year, STKL is up nearly 368%, being a huge winner in the new normal.
I question some of the Covid-boosted companies and their ability to sustain momentum. But that’s not the case for STKL stock. The underlying company produces a range of delectable (and most importantly sustainable) food and beverage products, from healthier fruit-based snacks to plant-based milk products. SunOpta even offers hemp milk, which is truly a sign of the times.
But a word to the wise – SunOpta’s hemp milk doesn’t contain cannabidiol (CBD) nor delta-9-tetrahydrocannabinol (THC), just omega 3 and 6. So, don’t get any weird ideas.
Moving forward, I expect STKL shares to perform well. Prior to the pandemic, more than 50% of millennials tried to incorporate plant-based products into their diet. I suspect that figure will rise in the post-Covid era.
Very Good Food Company (VRYYF)
A topic that most people won’t discuss is that while we may enjoy that juicy hamburger or that freshly cooked cut of steak, the protein didn’t just arrive in that form. Obviously, it came from an animal that previously must have thought that these strange two-legged creatures were feeding them out of their selfless good will.
The classic The Twilight Zone episode, To Serve Man, comes readily to mind.
Not only is the broader concept of harvesting animals for meat pretty messed up (if you think about it long enough), the actual process of dispatching animals is cruel and macabre. Fortunately, the Very Good Food Company offers the perfect marketing pitch: the only thing this firm butchers is beans for deliciously crafted vegan meat.
To be completely upfront, VRYYF stock is a risky play. While shares catapulted up about 261% over the trailing year, it’s down approximately 16% YTD. Still, if speculation is what you’re looking for, this might be your ticket. And if you lose out, at least you helped the wider sustainability movement.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.