With all the projected growth for plant-based food and beverage companies, it’s not surprising that investors continue to look for the best vegan stocks to buy.
Despite the industry’s growth slowing in 2021, Bloomberg Intelligence’s recent report on plant-based food and beverage suggests that plant-based revenue — which includes dairy, meat, and other plant-based alternatives — could grow to $166 billion by 2031 from less than $50 billion today.
“Given the softer performance in 2021 and what we expect to be a fairly conservative 2022, we still believe the industry will reach 5% penetration of the global meat market by 2031, but that the growth will accelerate a bit later than our original forecast,” Bloomberg Intelligence senior analyst Sarah Bartashus wrote in May.
Currently, plant-based meat alternatives account for 0.8% of the meat market. That’s expected to grow as much as 10-fold over the next nine years.
Here are seven providers of vegan and plant-based products that will benefit if Bloomberg Intelligence’s projections come to pass.
|BYND||Beyond Meat Inc.||$24.34|
|CAG||Conagra Brands Inc.||$34.01|
|MLFNF||Maple Leaf Foods Inc.||$20.04|
|TTCF||Tattooed Chef Inc.||$6.69|
|HAIN||Hain Celestial Group Inc.||$23.64|
Beyond Meat (BYND)
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While Beyond Meat (NASDAQ:BYND) is the biggest pure-play on this list when it comes to vegan and plant-based stocks, it’s taking a real beating in 2022. It’s down 60.8% through July 27 and 83.7% over the past 52 weeks.
The biggest concern that Wall Street has with the maker of popular products such as the Beyond Burger and Beyond Sausage is that its growth appears to be decelerating. Piper Sandler analyst Michael Lavery feels that the launch of Beyond Meat Jerky in collaboration with PepsiCo (NASDAQ:PEP) masks weakening sales in its other products.
“While jerky may continue to provide a near-term lift to Beyond’s U.S. retail sales, further declines in the rest of its portfolio may likely remain a meaningful headwind,” Barron’s reported Lavery’s comments in early June.
Of the 22 analysts covering BYND stock, only two rate it a “buy” or “overweight.” The average target price is $25.06, around where it’s currently trading.
If you’re an aggressive investor, a buy between $20 and $25 could be a long-term winner. If you’re not risk tolerant, Beyond Meat’s not for you.
Source: JHVEPhoto / Shutterstock.com
Kellogg (NYSE:K) announced on June 21 that it was splitting the company into three independent publicly-traded companies. One of those companies will be its plant-based business, led by MorningStar Farms.
The new company generated approximately $340 million in the past year, is profitable, and will become a pure-play plant-based business that will be able to focus its capital allocation on growing sales through acquisitions and investments in its existing business.
Kellogg is doing the three-way split so it can focus on its high-growth snacks business.
With so many competitors jumping into the plant-based food and beverage industry, Kellogg likely felt now was the time to exit the business. Relative to the $11.4 billion in revenue for its snack business — Pringles, Town House, Carr’s, etc. — the plant-based business’s sales are a rounding error.
By buying into Kellogg before the split, you will ensure you get a piece of the plant-based business while hanging on to the snack’s business, which is firing on all cylinders.
Conagra Brands (CAG)
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Conagra Brands (NYSE:CAG) has been an excellent place to park your money in 2022. Its stock is down less than 1% year-to-date compared to -18.8% for the S&P 500. As long as the bear market continues, the consumer staples stock remains a good defensive position.
As for its plant-based business, it owns Gardein, Earth Balance, and several other brands focused on plant-based foods. Pinnacle Foods acquired Gardein for $154 million in 2014. Conagra acquired Pinnacle in 2018 for $10.9 billion.
InvestorPlace’s Chris Lau recently recommended investors buy-and-hold CAG stock forever because its bottom line will benefit from inflation eventually easing. In the meantime, its strong roster of brands continue to take market share.
While analysts currently have a subdued view regarding Conagra — its average target price is $36.01, less than 10% above its current share price — it is trading at 1.47x sales, its lowest valuation since 2018.
If you’re a risk-averse investor, the 3.8% yield ought to be very attractive in this kind of market.
Maple Leaf Foods (MLFNF)
Source: Photo courtesy of Maple Leaf Foods
The only Canadian company on my list, Maple Leaf Foods (OTCMKTS:MLFNF) is a producer of both meat-based and plant-based products under brands such as Maple Leaf, Schneiders, and Lightlife and Field Roast, its plant-based brands.
In its Q1 2022 report, the company’s Plant Protein Group generated quarterly sales of 44.9 million Canadian Dollars ($34.8 million). That’s a small piece of its 1.13 billion Canadian Dollars ($875.3 million) in sales during the quarter.
Given how small its sales are for Lightlife and Field Roast, I would not be surprised if Maple Leaf sold the business to a strategic buyer at some point in the future. As for its Meat Protein Group, it’s very healthy with 7.5% year-over-year growth in Q1 2022.
Like Conagra, Maple Leaf has an attractive dividend yield of 3.1%. Get paid to see what it does with its plant-based business.
Tattooed Chef (TTCF)
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Tattooed Chef (NASDAQ:TTCF) is the smallest of the seven stocks in this article with a market capitalization of $548 million. The company went public through a merger with special purpose acquisition company (SPAC) Forum Merger II in November 2020.
The company’s frozen food products include Burrito Bowls, Pizza, Breakfast Bowls, and Frozen Vegetable blends. These products compete for more than $30 billion in total annual sales.
In 2017, Tattooed Chef had just 2 stock-keeping units (SKUs). Today, it’s up to 140 and growing. Four retailers carried its products in 2017. Today, more than 14,000 do.
Over the past three years, it’s grown its sales from $84.9 million in 2019 to $213.4 million. Very little of its sales were from its branded products. In 2021, they accounted for 65% of its sales with private label accounting for the rest.
On June 27, TTCF was added to the Russell Microcap Index. At some point, Tattooed Chef will get acquired by a larger business. In the meantime, it continues to scale its business. If you don’t mind a little risk, TTCF is an interesting stock to consider.
Source: JHVEPhoto / Shutterstock.com
Ingredion (NYSE:INGR) is the largest holding in the VegTech Plant-Based Innovation & Climate ETF (NYSEARCA:EATV) with a weighting of 9.46%. Beyond Meat is also owned by the actively-managed ETF. BYND has a 1.43% weighting.
The company manufactures ingredients for the food, beverage, paper, and personal-care industries. Sales of sweeteners and starches account for 80% overall.
The company continues to develop plant-based protein solutions. It estimates that the alternative proteins market is a $10-billion market. Over the past four years, it’s invested more than $250 million in its plant-based protein business developing products such as Vitessence pea protein isolates.
It expects to grow this segment of its business to more than $200 million in annual sales over the next four years from less than $50 million in 2021. That’s compound annual growth in excess of 70%.
Trading at 0.85x sales, INGR stock hasn’t been this cheap on a valuation basis since 2013.
Hain Celestial Group (HAIN)
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For those of you familiar with Tilray (NASDAQ:TLRY), its CEO is Irwin Simon. He built Hain Celestial Group (NASDAQ:HAIN) into a significant business over the 25 years that he was CEO and founder. He stepped down in 2018.
One of the businesses he acquired as CEO was Yves Veggie Cuisine, plant-based meat alternatives, in 2001. At the time of the acquisition, Yves Veggie had $35 million in sales. Today, the brand is part of a much larger organization.
In Q3 2022, Hain generated adjusted operating income of $42.4 million from $502.9 million in revenue. Its adjusted revenues grew 15% from a year earlier. Here in North America, its revenue grew by a healthy 13.3%, which offset a 13.6% decline internationally.
Like a lot of plant-based businesses, the past 12 months-24 months has reduced Hain’s valuation considerably. It now trades at 1.16x sales, about half its price-to-sales ratio in 2021.
The company launched a new business strategy in September 2021 that focused on investing in the brands with the greatest growth potential. That appears to be working. If the profits follow, this stock is a bargain at current prices.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.