Investor belief in alternative foods is at an all-time high and Beyond Meat (NASDAQ:BYND) stock is leading this trend.
After going public in 2009, the company garnered immense popularity among both meat and non-meat eaters. Plant-based meat became a great alternative for people who were looking for a more eco-friendly option.
Fast-forward to 2021, BYND stock now stands to disrupt a meat industry that’s worth $1.4 trillion globally.
Concerns about health and the environment have collectively led to increased growth in the alternative meat products market. However, pandemic headwinds and restaurant closures have impacted Beyond Meat’s bottom line in the last year.
The company did not meet analyst expectations in the previous quarter, pushing the stock lower. Now, though, with a third of the population vaccinated, a reversal of fortunes is definitely in the cards.
This makes Beyond Meat’s stock price a great entry point for investors who want to benefit from future tailwinds.
BYND Stock Will Thrive
Beyond Meat is a frontrunner in the alternative meat space but increased competition coupled with Covid headwinds put a wrench in the company’s growth.
After negative sentiments towards the stock in the last couple of months, BYND stock slid lower as the company reported poor first-quarter results. Revenue increased by 11% to $108.2 million but was lower than analyst estimates of $113.7 million. EPS was also down by 42 cents.
Although the stock dipped, there is still light at the end of the tunnel for Beyond Meat. For one, sales in the company’s retail business jumped 27.8%. This signals that demand for alternative meat products remains strong. As restaurants open up to full capacity in the coming months, we are likely to see a similar trend in the U.S. food services business as well.
A second factor worth considering is that the company is still recovering from the pandemic. With retail sales growing significantly in the U.S. and abroad, it’s only a matter of time before food services catch up. Food services aka restaurants were among the worst-hit businesses in the pandemic.
As the negative effects of the closures start to fade, we will see a reversal of fortunes for BYND stock. In that vein, I would say, the company is definitely one to have on your radar.
A third element to consider is the growth of the alt meat market. According to CNBC, the global meat substitute market is worth $20.7 billion and will grow to $23.2 billion by 2024.
In 2019, the sale of plant-based meat grew by 18%. As plant-based meat gains mainstream attention, more companies are getting in on the action. Food giants like Tyson (NYSE:TSN) are offering more plant-based options and Beyond Meat just announced that it will roll out more products in 2,100 Walmart stores.
The Oatly Effect
It’s not just alt meats that are in the spotlight, alt foods like eggs, dairy and protein are in high demand as well. A key attributor to this is consumers’ need for more sustainable and organic food options.
Oatly hit the public market on May 20 at $17 per share and ended the day 19% higher. In response to its successful IPO, BYND stock closed higher as well. It should open today above $135.
While Oatly and Beyond Meat are not linked, both companies do belong to produce plant-based alternatives. The growing investor optimism towards alternative products such as these signals greater growth for companies in the sector.
The Bottom Line
Competition in the alternative meats market is heating up as more players enter the space. However, this should not be a cause for concern because a) Beyond Meat is a market leader and b) the competition is a sign of the shift in consumer trends in favor of plant-based meat.
Although, Beyond Meat may be nowhere near its pre-Covid highs, the opportunities that lay ahead look promising. The recent dip in the share price presents a great opportunity for investors to get in while prices remain low.
On the date of publication, the author held had no position in any of the stocks mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.