A HIGH-GROWTH COMPANY AT A MORE REASONABLE PRICE
Beyond Meat Inc (NASDAQ: BYND) was one of the hottest IPOs of 2019. Its offer price last May was $25. Its 1st-day close was $65.75. The stock peaked in July at $239.71. With the recent coronavirus-induced bear market, the stock has been hovering around the 1st-day close price. BYND just closed at $72.30 on Thursday (April 9th, 2020).
I think that this could be a reasonable price to take a nibble on BYND. Previously, I wrote that I would want the stock to fall to $50 before taking a bite. It did fall below $50 just briefly last month on March 19th.
BYND’s goal is to make plant-based meats that taste as good or better than animal-based meats, that have the same texture, and cost less. They believe that they are meeting two huge consumer demands – health and sustainable farming. Although the health benefits are debatable, the company believes in the health advantages of its products over animal proteins, such as less saturated fat and no cholesterol.
As a BYND customer, I think that their Beyond Burger tastes great and I often prefer it over an animal-based burger. So this meets my number 1 rule when investing in stocks: invest in what you know and like. And no, I’m not vegan or vegetarian.
BYND has been executing its growth strategy by expanding its partnerships with reputable brands, such as McDonald’s (NYSE: MCD) and Starbucks (NASDAQ: SBUX) (both in Canada). They have also partnered with other high-profile companies.
In order to dominate the plant-based meats market, they will need to keep expanding their partnerships.
WHAT ABOUT THE FINANCIALS
BYND’s sales have had tremendous growth. The revenues increased 338.8% year-over-year from $87.9 million in 2018 to $297.9 million in 2019.
Their losses-per-share has been decreasing. It was -$4.75 in 2018 and only -$0.29 in 2019.
They have $276.0 million in cash with merely $20.1 million in long-term debt. Their debt-to-equity ratio is only 17.7%.
If the economy worsens, as it’s expected to during the pandemic, BYND’s stellar balance sheet should help them get through it just fine.
Any negative press about the healthiness of their products could be damaging to BYND. If BYND faces any challenges with their partnerships, this could hurt their growth strategy. Competition is heating up from companies like Impossible Foods.
Beyond Meat Inc is at the forefront at what could be a megatrend in plant-based meats. They are executing their growth strategy very well through their partnerships. The recent coronavirus-induced bear market is offering BYND stock at a more reasonable price than its 2019 highs.
I/we own shares of stock in BYND, SBUX
Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies whose stocks are discussed in this article.
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Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.
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