Beyond Meat is sizzling.
The stock has surged 162% off March lows, getting another big boost Wednesday after posting a surprise quarterly profit. The company has benefited from meat shortages and plant shutdowns in the U.S. as processors such as Tyson grapple with the coronavirus pandemic.
Those results shined a light on the alt-meat universe beyond Beyond Meat. Rivals such as Tyson, Hormel and Kellogg’s have their own lines of plant-based proteins; grocery chains Kroger, Walmart and Amazon‘s Whole Foods carry Beyond products; and Starbucks and Dunkin’ are two of Beyond’s biggest retail partners.
Mark Newton, president of Newton Advisors, says Beyond Meat is still best in class.
“Near term, I actually like Beyond Meat much better than anything other in its space. The stock has shown very good signs of acceleration lately,” Newton told CNBC’s “Trading Nation” on Wednesday. “It means that the stock could likely get up to $135, so that’s still about 10% higher.”
“One I don’t like is Tyson Foods. That actually is starting to break down, and my thinking is it gets down to $50 and if not the mid-$40s,” he said. “We saw nearly the highest level of volume this has traded, at least in the last year, on Monday. It traded down about 11 million shares, and it broke down substantially. So, two stocks going exactly in the opposite direction.”
Mark Tepper, president of Strategic Wealth Partners, is not as bullish on Beyond Meat, warning of several headwinds ahead.
“I’m not crazy about the long-term growth story,” Tepper said during the same segment. “This is probably the deepest recession ever and typically in recessions people rein in their spending and they trade down. And you’re already seeing that happen. So, people are buying more chicken relative to beef because it’s cheaper. And Beyond Meat sells what I would call a premium, premium product. You have organic grass-fed beef, which is a premium product and Beyond Meat is 40% more expensive than that.”
Instead, Tepper is looking to ride the alt-meat wave further down the supply chain.
“Grocery stores are going to be the clear winner here. Walmart’s the largest grocery store in the world, that’s the way we’d be playing this right now,” said Tepper.
Walmart has risen 4% this year, far better than the 12% decline on the S&P 500.
Disclosure: Strategic Wealth Partners holds Walmart.
