Beyond Meat (NASDAQ:BYND) has lost almost 66% of its value in 2022. That decline put investors in a sour mood when it comes to investing in the best vegan stocks.
Further, it seems that the food industry can’t decide if vegan or plant-based is a more favorable term for their products.
“‘I believe the term plant-based carries the broadest appeal and is easily understood,’ [Stray Dog Capital venture capitalist Lisa Feria] Feria tells VegNews.
‘The term vegan still, unfortunately, has some negative connotations that expand beyond food consumption. Vegans typically live their lives seeking non-animal-based products in general. Flexitarians may just want a plant-centric meal for dinner,’” VegNews contributor Nicole Axworthy wrote in August.
However, part of the problem is that consumers don’t even know the difference. According to Axworthy, a 2020 study by the Vegan Society found that 64% of respondents thought plant-based meant free of animal products.
For this article, I considered all companies that sell animal-free products, whether they’re vegan or not.
Here are the three best vegan stocks to buy from an investment standpoint.
|KROP||Global X AgTech & Food Innovation ETF||$16.36|
Global X AgTech & Food Innovation ETF (KROP)
When I was assembling a list of vegan stocks for this article, I initially examined the names owned by food and agriculture-related ETFs. The most relevant ETF seemed to be the Global X AgTech & Food Innovation ETF (NASDAQ:KROP).
The catchy stock symbol for the ETF aside, the fund tracks the performance of the Solactive AgTech & Food Innovation Index. The index provides exposure to companies that derive at least 50% of their revenues, operating income, or assets from two business activities: AgTech and Food Innovation.
The sub-segments of AgTech include Precision Agriculture, Robotics/Automation, Controlled Environment Agriculture (CEA), and Agricultural Biotechnology. Sub-segments of Food Innovation include Protein & Dairy Alternatives and Food Waste Reduction. In addition, companies that don’t currently generate revenues from these areas but will in the future can be included in the index.
Consumer staples is the highest-weighted sector of the ETF’s holdings at 42.6% of the portfolio. Materials and industrials make up an additional 52.5%, and health care and consumer discretionary account for the remaining 4.9%.
While I mentioned Beyond Meat in the introduction, the company-specific risk that BYND stock carries at this point in its development would make it irresponsible for me to recommend the shares wholeheartedly. I love its products, but even I need more proof that the company can grow sufficiently and become profitable in the future.
In 2022, KROP is down 17.8%, representing a slightly worse decline than the S&P 500. When the industry gains traction, a rising tide will lift this boat and many others like it. Buying a diverse ETF like KROP is a smart way for investors to bet on animal-free products.
KROP’s largest holding is Corteva (NYSE:CTVA), which accounts for 15.57% of its assets. CTVA is a pure-play agriculture company specializing in seed-and-crop protection solutions. It competes in more than 140 countries worldwide. Corteva was spun-off from DowDupont on June 1, 2019.
For 2022, based on the midpoint of its guidance, Corteva expects its sales to climb 11% to $17.35 billion. It also provided guidance for a 17% increase in its operating earnings before interest, taxes, depreciation and amortization (EBITDA). The company predicts that its operating EBITDA will come in at $3.03 billion this year. Its free cash flow for the year should be between $1.0 billion and $1.3 billion.
For the first half of 2022, it reported that its revenue had climbed 11% to $10.85 billion. During the same period, its operating EBITDA rose 17% YOY to $2.76 billion.
The company’s Seed segment accounted for 60% of its overall sales, while its Crop Protection unit generated the remaining 40%. North America accounted for 56% of its sales in the first half of 2022.
A total of 26 analysts cover Corteva Stock. Eighteen of them rate it “overweight” or “buy” with an average target price of $66.47, versus its current share price of $62.
Lindsay (NYSE:LNN) is the sixth-largest holding of KROP, accounting for 6.25% of its assets.
Like Corteva, Lindsay’s center-pivot and lateral-move crop watering systems help keep farmers’ crops healthy. Since 1955, its products and services have helped farmers conserve their resources and increase their yields. In addition to irrigation products, Lindsay manufactures infrastructure solutions for highways and railroads.
In Q3, Lindsay’s irrigation products accounted for 88% of its top line, which came in at $214.3 million. The firm’s infrastructure business accounted for the remaining 12% of its revenue. Lindsay’s overall sales grew 32% YOY, while its operating income jumped 65% to $35.2 million, representing an 16.4% operating margin.
The revenues of Its international irrigation business jumped by 75% in Q3. The sales of its infrastructure business grew 17% YOY during the quarter, while the segment’s operating income was flat YOY.
Since consumers remain concerned about their food security, the company’s irrigation business should continue to generate strong revenue growth.
On the infrastructure front, the push by the Biden administration to rebuild the country’s highways and roads should boost the sales of its road safety products.
While Lindsay doesn’t make plant-based or vegan food, it does provide products to farmers that keep the food supply healthy and alive. Without Lindsay and its peers, crops wouldn’t yield nearly as much, putting the production of vegan and plant-based foods in greater jeopardy.
Its two businesses are boring but essential.
On the date of publication, Will Ashworth 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.