Beyond Meat (NASDAQ 🙂 regains its momentum after a dramatic fall of grace last year. The producer of vegetable meat has indeed increased more than 60% in the first two weeks of the trade in 2020.
The latest rise in the share price is the result of many positive developments that show that the company based in El Segundo, California is rapidly gaining market share at a time when consumers are increasingly buying vegetable-looking and meat-flavored products.
Investors are offering more than the Beyond Meat shares on Tuesday after Executive Chairman Seth Goldman said the company plans to expand to China this year as part of its global plans. "We have not announced anything, but we are expected to do something this year," Goldman said on the stock exchange of the US National Retail Federation.
According to Goldman, vegetable protein sales in the next decade could represent 13% of total supermarket meat sales; increasing production to meet these levels would require overseas expansion. The news sent BYND shares around 17% on Tuesday to trade for $ 134.78. It closed 2.4% for the day at $ 117.05.
Beyond Meat Weekly Prices
Beyond Meat has been on a roller coaster ride since it was announced early May at an IPO price of $ 25 per share. Despite the impressive run this year, the shares have still fallen more than 40% from their peak in July last year.
Stocks rocketed earlier this month after fast food giant McDonald & # 39; s (NYSE 🙂 said the Beyond Meat patties tested at some locations in Canada are "exclusive" to the fast food chain. Another restaurant chain Dunkin Brands Group (NASDAQ 🙂 announced this week that rapper Snoop Dogg would play the lead role in a TV advertising campaign and promote a sausage roll made from vegetable protein from Beyond Meat.
Lofty Valuations
But the striking rally of Beyond Meat also raises questions in the minds of cautious investors trying to justify these lofty valuations. After the sharp rise this year, the market value of the supplier of the meat supplier is more than $ 7 billion, making it in the ranking of established food companies with billions of dollars in sales.
Tyson Foods Inc (NYSE :), the largest US meat producer has a market capitalization of $ 33.76 billion with an expected turnover of $ 43 billion for the current financial year. Before yesterday's rise, Beyond Meat was trading with the enterprise-to-12-forward-sales-multiple of 29 – a huge premium compared to other packaged food companies that trade with low single-digit valuations.
Of course, these comparisons make little sense if we are dealing with a fast-growing company such as Beyond Meat, but investors must take into account the threats that could damage this very ambitious expansion scenario.
After seeing the success of Beyond Meat, some major players have already entered the vegetable food market. Nestle (SIX 🙂 launched the vegetable Awesome Burger in the US in September. Supermarket chain Kroger Company (NYSE 🙂 is the newest company that joins the group with the launch of vegetable pasties under the Simple Truth brand.
Bottom Line
Beyond Meat has attracted the attention of a market that was left open by the major food companies. But that space becomes crowded, with many established players taking part in the battle.
We do not believe that Beyond Meat has a large economic moat to defend its terrain once the competition is firmly established. Investors who had the chance to buy this share low should shorten their positions and book a profit.