Plant-Based Meat Is On the Rise

Shares of meat alternative company Beyond Meat (Ticker Symbol: BYND) are up over 250% since its Initial Public offering on May 2nd of this year.  The El Segundo, California based company is targeting consumers that are trying to embrace a flexitarian diet, which allows meat and animal products in moderation but encourages mainly plant-based foods. Beyond Meat’s meat alternatives are designed to closely imitate the texture and taste of traditional meat. The company’s products can not only be found in grocery stores but are also available in restaurants like Red Robin, Del Taco Restaurants, and TGI Friday’s.  

Nestlé, the world’s largest food company, decided it was going to step into the fast-growing plant-based burger market in the United States. Nestlé will be launching its plant-based products through the health food brand, Sweet Earth, which it acquired in 2017. The global food giant will launch its Awesome Burger in the third quarter of this year.  The plant-based burger substitute will be available in grocery stores, universities, and restaurants. In April of this year, Nestlé released a wheat-based veggie burger that is available in Europe and has been having good results thus far.

McDonald’s (Ticker Symbol: MCD) is not announcing plans anytime soon to add a plant-based burger to its menu.  The Chicago-based has been slimming down its menu but the company is facing pressure from industry competitors that are moving into the plant-based burger space.  McDonald’s locations in Germany just began selling Nestlé’s wheat-based veggie burgers at certain locations, with plans to expand further.

McDonald’s stock was stuck in a 4-year long Horizontal Channel from 2012 to 2016 between the prices of $105.00 and $85.00.  The stock finally broke out from that congestion on a good earnings and revenue report while also issuing positive guidance.  After finding some minor support at the 100-Week Moving Average, it then broke out of a Bull Flag consolidation pattern to the upside, in the first quarter of 2017 and proceeded to rally over 75% over the course of the next three years. McDonald’s stock ticked to an all-time high of $200.89 on May 21st of this year.  

(Chart above courtesy of ​www.tipranks.com​)  

Based on a survey of 16 analysts offering 12-month price targets, the average price target for McDonald’s stock is $216.00.  According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $199.03.  

Plant-based substitutes are becoming more and more popular as consumers are trimming down their meat consumption for health and environmental reasons.  The pizza chain, Little Caesars, has announced that it is going to make a plant-based version of sausage crumbles to go onto its pizzas. Investors who are interested in the new surge in plant-based products should look to Beyond Meat’s first quarterly earnings report set to release after the closing bell on Thursday.