Recently, it has become part of the news cycle for financial media to speculate on what the next Reddit “meme stock” is. In that vein, Bank of America analysts have now identified Beyond Meat (NASDAQ:BYND) as a potential candidate. Of course, trading solely based on Reddit is ill-advised. But I actually like the long-term prospects of BYND stock.
This company has had a lot of hype in the past, but it has also seen plenty of skeptics, too. This has led to incredibly volatile price action for BYND stock. In recent months, Beyond has been stuck in a wide trading range roughly between $120 and $180 per share.
However, there are certain developments that point to a potential breakout for BYND stock now.
BYND Stock: Foodservice Revenue Is Set to Recover
Looking at the headline results of Beyond Meat’s first-quarter 2021 financials, the company’s revenue growth may not seem impressive at first. Revenues for the quarter increased by about 11% year-over-year (YOY), from $97.1 million to $108.2 million.
However, this small growth number occurred because the retail gains the company made were offset by a decrease in foodservice channel sales. This is somewhat understandable, given the slowdown in restaurant demand due to continued pandemic-related restrictions.
Moving forward, though, I believe restrictions will ease worldwide and it will only be a matter of time before foodservice channels return to normal. And in the meantime, the company has been busy expanding its partnerships with major foodservice providers. For example, Beyond is launching a bevy of new and exciting products with Yum! Brands (NYSE:YUM), such as a plant-based wrap for KFCs in China and a new topping for Pizza Hut. These partnerships make me confident in a recovery for the foodservice revenue behind BYND stock.
Beyond Meat Has Huge Potential in Europe
There’s more to like about BYND stock, however.
Breaking down these revenue numbers, U.S. retail sales actually increased by nearly 28% YOY, from $49.9 million in Q1 2020 to $63.8 million in Q1 2021. Moreover, international retail sales significantly improved as well, growing by 189%. For the quarter, international retail sales were $17.2 million or about 21% of total retail sales. It’s not hard to imagine a future where these would make up a much larger portion of sales.
In fact, there is actually a growing number of vegans in other countries today. Not only that, but the shift away from meat is occurring much faster in other countries, too. According to research by Berlin-based vegan supermarket chain Veganz, “the number of vegans in Europe has doubled in four years.” Apparently, there are 2.6 million vegans in Europe as of 2020. Furthermore, “flexitarianism” is rising, with over 30% of Europeans indicating that they are “consciously consuming less meat.”
So, Europe is clearly a prime market for Beyond Meat. The company realizes this as well. Recently, BYND announced major expansions to its European retail distribution. More specifically, it is entering 445 new stores in the U.K., 1,000 stores in Germany, 1,500 in Austria, 155 in Switzerland and “nearly 1,000” in the Netherlands. The company also just opened a new co-manufacturing facility in the Netherlands to support the region’s growing demand.
Investor Takeaway on BYND Stock
When it comes down to it, Beyond Meat’s expansion into international markets is incredibly promising. The secular trends in Europe are pointing to an acceleration of sales. And on top of that — as Covid-19 restrictions ease — the company’s foodservice business should see a swift recovery, too.
All told, I believe investors should take the opportunity and buy BYND stock today.
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On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.
