Jan 24, 2023
While the debate over fake meat rages on and the industry declines, the most prominent investor in the space is still keeping the faith. Billionaire philanthropist Bill Gates recently said he expects faux meat brands will win over consumers someday.
“I think eventually these products will be very good even though their share is small today,” he said in a Reddit post recently.
Bill Gates investing in fake meat companies
And he’s put his money where his mouth is too. Gates has backed several high-profile startups in this space, including Beyond Meat (NASDAQ:BYND), Impossible Foods and Upside Foods, which was previously known as Memphis Meats.
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But for the “clean” alternatives to meat to appeal to more than just vegans, Gates added they need to be as affordable (and tasty) as the traditional products.
However, considering that fake meat brands have been swept up in the ongoing culture war, there’s no guarantee that Gates’s vision will become reality.
The backlash against “woke capitalism” and the rising cost of food in general has evaporated the sales of fake meat in recent months. And it’s got some investors saying the sector may be based on a passing fad, while others expect the industry to grow 19.3% on average every year until 2030.
If you’re as optimistic as Gates and industry analysts are, here are the top three stocks you should add to your watch list.
Beyond Meat
Beyond Meat is an obvious choice. For mainstream consumers, the Los Angeles-based brand is synonymous with plant-based meat alternatives. For investors, on the other hand, it’s synonymous with “bubble stock.”
After tripling in value during the pandemic, Beyond Meat stock has lost about 75% of its market value in the last 12 months.
In its most recent quarter, sales declined 23% while profit margins remained negative. The company’s future depends on whether it can turn things around and boost sales in 2023.
Now, the stock trades at a price-to-sales (P/S) ratio of 2.3, which is in line with the S&P 500’s average P/S ratio of 2.42. Put simply, this is a risky bet for any investor willing to take a contrarian approach.
Tyson Foods
Arkansas-based Tyson Foods (NYSE:TSN) is on the other end of the spectrum from Beyond Meat. It’s an 88-year old meat producer with significant market share across North America and the rest of the world. The company has tried to enter the fake meat market multiple times, most recently in 2021.
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However, sales in the company’s “processed food” segment, which includes fake meat, has been relatively flat in recent quarters. Fake meat and vegan alternatives remain a small fraction of Tyson’s overall sales.
Tyson could be an ideal pick for conservative investors. The company is poised for robust and steady growth as traditional meat remains in demand. But if Bill Gates is right and fake meat sales skyrocket, Tyson won’t be left out of the market shift.
Put simply, it’s a safe bet.
Ingredion
Ingredion Incorporated (NYSE: INGR) rarely gets mentioned but it’s a key player in this sector. The Winchester-based company supplies raw material to the world’s biggest food producers, including the pea-based proteins used by fake meat producers across the world.
Sales surged 15% in the most recent quarter, while net profit soared 17%. The stock trades at a price-to-earnings ratio of 15.4. It’s an undervalued bet on the innovation in the global food industry, not just fake meats.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
Managing Money • 21h ago
