Will Beyond Meat Get a Bounce Out of Meatballs?

09/29/2020 5:00 am EST

Focus: CONSUMER

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Beyond Meat (BYND) has always had a good story and rapid growth, and now the stock — which is on our "watch list" — is setting up a tidy launching pad, asserts Mike Cintolo, editor of Cabot Growth Investor.

The company is the leading player in the plant-based meat industry, with burgers, sausages, meatballs, ground beef and more that have been specially designed to have the look, feel and taste of meat-based burgers.

Given that meat sales in the U.S. alone are a mind-boggling $270 billion, the potential of healthier (ingredients include beans, brown rice, peas, coconut oil and cocoa butter), plant-based meat is huge — just a couple percent of the meat market in the U.S. would have Beyond growing revenues seven-fold from here!

Yes, there’s competition, but there’s certainly room for a few players here, and Beyond continues to make moves (doubled retail distribution for its sausage patties; meatball launch in early October, the third product launch this year; expansion into China; new e-commerce site) to grab more market share.

In Q2, food service-related sales plunged as restaurants closed (down 61% in the U.S.), but retail and direct-to-consumer sales picked up steam (up 190%!).

Going forward, earnings are expected to leap back into the black in Q3, with 2021 (sales up 61%, earnings up seven-fold) likely to see explosive growth. (Beyond usually tops expectations, so even these figures are likely conservative.)

As for the stock, it flashed plenty of big-volume accumulation during its post-crash rebound, and encouragingly, has built a great-looking 14-week base, with little selling volume, tightness near the lows and some buying volume appearing as BYND has perked up.

We’ve been keeping an eye on Beyond Meat since it came public in April of last year, from its initial giant run (to a high of $240!), to its just-as-giant decline (down to $50 during the crash) and rally after (to nearly $170), before pulling back again.

It still has some work to do, but this is really the first legitimate launching pad the stock has etched since coming public — a powerful breakout could be a "go" signal.

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