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4 Stocks to Gain on Growing Taste for Vegan Meat

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Consumers are increasingly opting for vegan meat products over beef and pork on concerns over health and environmental risks, thereby encouraging more companies to enter the space. In U.S. stores, shoppers now have more options for plant-based “faux foods” as firms are gradually coming up with more products in the competitive supermarket aisle.

Plant-Based Meat Going Mainstream

According to Beyond Meat Inc. (BYND - Free Report) , it takes 58 gallons of water and 41 square feet of land to produce one 0.25-pound beef burger. Moreover, cows belch methane, which is more potent at trapping heat than carbon dioxide.

The four main building blocks of meat — protein, fat, water and trace materials — can be found in plants. Thus, plants are suitable alternatives for meat firms, helping them not only save the environment but also capitalize on the rising demand for plant-based burgers and sausages.

US Stores to See More Meatless-Product Sales

The Kroger Co. KR, among the largest grocery retailers in the United States, projects that there will be continued growth in demand for meatless products in 2020. In fact, to capitalize on the growing trend, the company recently expanded its plant-based offerings with the launch of meatless ground beef and burger patties.

More companies are increasingly unveiling meat substitutes that they claim will mimic the taste, texture and sizzle on the grill as real meat. Notably, UBS Group AG (UBS) has projected that the grocery stores in America will see $7.2-billion sales of meat substitutes by 2025, suggesting a surge from 2018’s $750 million.

Meat-Loving China: A Big Market to Capitalize On

With China reportedly consuming 27% of the world-wide meat production, analysts believe that more consumers in the nation will switch to vegan meat once there has been a significant rise in awareness regarding the health and environmental impact of meat products.

U.S.-based vegan meat producers, including Impossible Foods and Beyond Meat, have shown strong intentions to capitalize on the huge China market of plant-based meat alternatives. Beyond Meat is willing to commence vegan meat production in China by 2020-end. Impossible Foods, which recently unveiled plant-based pork, reportedly foresees significant opportunities in China as the nation consumes the largest amount of pork in the world.

Notably, American non-profit organization, The Good Food Institute, has estimated that in 2018 the value of China market for plant-based meat products was $883.8 million, significantly higher than $684 million of the United States.

Stocks to Gain

With competition mounting in the imitation meat business and companies targeting broader audiences, both vegetarians and non-vegetarians, we have shortlisted four stocks that are poised to gain. While two stocks carry a Zacks Rank #2 (Buy), the other two carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Through Gardein brand, Walmart Inc. WMT offers vegan meat that includes porkless bites, meatless meatballs and more. The Bentonville, AR-based retailer currently carries a Zacks Rank #2 and has seen positive earnings estimate revisions for fiscal 2020 and 2021.

Since August,Restaurant Brands International Inc. QSR has been offering meatless burger of Impossible Foods through Burger King. The #2 Ranked company – headquartered in Toronto, Canada – is likely to see earnings growth of 10.3% in 2020.

Conagra Brands, Inc. CAG, headquartered in Chicago, IL, acquired Pinnacle Foods in October 2018. The emerging brands that Conagra added to its portfolio following the acquisition include Gardein.

Through Gardein brand, Conagra — with a Zacks Rank of 3 — offers meatless meatballs, beefless burgers and more.

Notably, Conagra beat the Zacks Consensus Estimate in three of the trailing four quarters, the positive earnings surprise being 3.2%, on Average. The stock is likely to see earnings growth of 6% and 8.3% in fiscal year 2020 and 2021, respectively.

Headquartered in El Segundo, CA, Beyond Meat, Inc. is among the fastest growing food companies in America. The company offers revolutionary plant-based meat products that include burgers, ground meat and sausages. Since its IPO in early May, the Zacks #3 Ranked stock has surged more than 150%.

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