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Here's Why Beyond Meat (BYND) Should be in Your Portfolio

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Beyond Meat, Inc. (BYND - Free Report) is a maker of revolutionary plant-based meat substitutes. The decline in the company’s shares of almost 12% in the past month has opened up a buying opportunity for investors.

Precisely, the rapid spread of coronavirus on a worldwide scale is not a threat to this El Segundo, CA-based company. Instead, it will probably lead to higher consumption of plant-based meat products. Let’s discuss the reasons for which investors should be bullish about the Zacks Rank #2 (Buy) stock.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coronavirus Not a Concern

The growing number of coronavirus cases across the world has rattled equity markets. Per global health officials, cases of infected patients have exceeded 79,000. Nevertheless, the number of cases outside China is still significantly lower at roughly 2,000, the officials confirmed.

Growing evidence from studies that link coronavirus to bats will probably raise apprehension among people who consume animal meat. This is likely to lead to a demand surge for substitutes that mimic the taste, texture and sizzle on the grill of meat.

Limited International Exposure

Per Beyond Meat’s latest presentation, there are nearly 28,000 retail outlets across the United States and Canada that sell the company’s products. The investor presentation also reveals that the total number of restaurant and foodservice outlets across the countries offering the company’s products is roughly 23,000. In international markets, excluding Canada, the company’s plant-based meat substitutes are offered in only 7,000 retail and foodservice outlets, according to the presentation.

Thus, Beyond Meat has limited exposure to international markets, especially in Asia, where the outbreak has been disrupting economic activities.

Innovation is the Key Attribute

To improve the taste and texture of its plant-based meat products, the company invests significantly in research and development (R&D). This was revealed in Beyond Meat’s latest presentation, which states that the company’s R&D expenditures as a percentage of net revenues is at 10.9%. The ratio looks encouraging since other food industry heavyweights like Kellogg Company (K), Conagra Brands, Inc. CAG and Tyson Foods, Inc. TSN — with strong focus on plant-based meat industry — have R&D expenditures as a percentage of net revenues of 1.1%, 0.6% and 0.3%, respectively, per the investor presentation.

 

 

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