4 Stocks Outperforming the Major Future-of-Food ETFs

Concerns about interest rate hikes and inflation have caused a downturn in the stock market. Many technology stocks have suffered because of these macroeconomic headwinds, and now looks like a good time to consider diversifying your portfolio by adding stocks of companies that provide stability and consistency.

Food stocks can offer protection and fair returns during both upward and downward economic trends. Another reason to invest in this defensive sector is that it is undergoing significant changes focused on health benefits, environment, safety, and transparency.

Since the outbreak of Covid-19, the food industry has seen numerous emerging trends as individuals have been increasingly concerned about their health. Thanks to the increasing awareness of food safety measures and scientific developments, consumers now have a better understanding of the quality of the food they consume.

The lifestyle choices, living standards, and diets of consumers are changing. The pandemic has sparked a long-term transition in the food business toward healthier, environmentally friendly products. These trends show no indications of slowing, and regardless of the state of the economy, companies that are driving these trends forward are projected to have a steady demand for their products and services. The food industry is continuing to innovate as two popular indexes track the future of food industry performance.

The Global X AgTech & Food Innovation ETF (NASDAQ: KROP) invests in companies that are developing agricultural products and food technology innovations, such as precision agriculture, agricultural robots and automation, controlled environment agriculture, agricultural biotechnology, protein/dairy alternatives, and food waste reduction.

The VanEck Future of Food ETF (NYSEARCA: YUMY) is an actively managed fund that invests in global companies involved in sustainable agriculture and food innovation. Food technology, precision agriculture, and agricultural sustainability are among the three sectors covered by the actively managed fund, with ESG barometers factored into the investment process.

Exhibit 1: March Performance of KROP and YUMY (daily % change)

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Source: Google Finance Historical Price

As manufacturers respond to changing demand, the outlook for the food sector has turned positive, providing an intriguing opportunity for investors to gain exposure to this sector. On that note, these four food stocks are worth keeping an eye on because they are projected to beat the indices in the near future, similar to how these companies have beaten the performance of food industry benchmarks so far this year.

Ingles Markets, Incorporated (NASDAQ: IMKTA)

Ingles Markets, Incorporated is a supermarket chain in the southern United States with almost 200 stores. Its product offering includes groceries, meat, dairy products, frozen food, and other perishables, as well as gasoline, dairy operations, and shopping center rentals.

With revenue of $4.98 billion in 2021 and grocery products accounting for 35.3% of total sales, the company’s revenue has been continuously increasing, and its cash flows appear to be healthy. IMTKA is up close to 9% this year, while KROP is recovering and trading at the same level as it was at the start of the year. YUMY, on the other hand, has a negative 9% year-to-date return.

MeaTech 3D Ltd. (NASDAQ: MITC)

MeaTech is a global deep-tech food firm established in Israel. The company aims to develop slaughter-free meat products, such as cultured fat, hybrid, ground, and whole cuts of meat, using biotechnology and engineering capabilities as a replacement for industrialized animal farming.

The company has celebrity backing. It has partnered with Hollywood actor and entrepreneur Ashton Kutcher who will help MeaTech become a global leader in cultured meat production.

The company recently announced plans to extend its footprint in the United States by building a new facility that will provide them access to accelerate their R&D capabilities. Also, MeaTech’s wholly owned Belgium subsidiary, Peace of Meat, signed a term sheet agreement to complete a 21,530 square foot pilot plant and R&D facility by 2023 to scale up manufacturing of cultured fat biomass. Cultured fat is crucial in the development of cultured meat and will also be offered as an ingredient to enhance the meaty flavor and mouthful of plant-based alternative meat products.

MITC seems to have been experiencing a recovery over the past few weeks, having gained over 10% month-to-date. Given this, and the previous highs we’ve seen from the stock, it would be reasonable to conclude that the stock is gaining momentum as investors acknowledge the growth potential of the company. Moreover, it seems that this recovery may just be starting which positions the stock currently as potentially undervalued and a unique buying opportunity.

Beyond Meat, Inc. (NASDAQ: BYND)

Beyond Meat, Inc. is a plant-based meat substitute company established in the United States and in 2019 became the first plant-based meat company to file for an initial public offering (IPO). The company offers plant-based substitutes for beef, meatballs, ground meat, pork sausage links, and patties.

Because of its market domination, Beyond Meat was a significant winner during the pandemic. Aided by collaborations with McDonald’s, KFC, Pizza Hut, and Taco Bell, the company is moving in the right direction to secure long-term competitive advantages. Beyond Meat stock has also gained traction in the last few weeks after a tough start to the year.

Tyson Foods, Inc. (NSE: TSN)

Tyson Foods, an American multinational food company that manufactures a range of frozen and refrigerated food products, completes this list. In addition to its food products, the company has an integrated operation that includes breeding stock, contract farmers, feed production, chicken processing, and transportation. Tyson’s total sales grew to $12.9 billion in the first quarter of fiscal 2022, up more than 24% year-over-year, helped by its multi-protein portfolio. TSN has gained 5% year-to-date.

As the food industry continues to evolve, many young and established food companies are likely to emerge as big winners in the next few years. Investing in these companies today could help investors enjoy lucrative investment returns in the future.

Beyond Meat Goes on a Hiring Spree Ahead of 2022

Beyond Meat is looking to expand its presence in the fast-food sector in the coming months and has started the personnel to help it achieve the goal.

Beyond Meat Hires Tyson Foods Execs

Beyond Meat has announced that it has hired two veteran executives from Tyson Foods as it looks to expand its fast-food business in 2022. The company said it is working on some high-profile launches in the coming months.

The company has hired Doug Ramsey to serve as the chief operating officer. Ramsey is a veteran in the industry after working for three decades at Tyson, in charge of its poultry and McDonald’s businesses. The former Tyson executive is expected to be an asset for Beyond. Beyond recently signed a three-year deal with McDonald’s and Ramsey will be set to play a crucial role in how the business will be conducted.

Beyond also announced partnerships with Taco Bell owner Yum Brands and PepsiCo. The company has also hired Bernie Adcock to serve as the chief supply chain officer. Adcock is vastly experienced in the sector, having worked more than 30 years at Tyson Foods.

Beyond Meat CEO Ethan Brown stated that “Everything we have going, whether it’s the partnership with McDonald’s, with Yum, with PepsiCo, there’s an enormous amount of growth on the table, and we need to make sure we have the very best in operational and supply chain capabilities available to us and our customers.”

BYND Rallies by More Than 5%

The shares of Beyond Meat is up by more than 5% since the US market opened a few hours ago. At press time, BYND is trading at $75.10 per share, up by 5.7% over the past few hours. The stock has underperformed since the start of the year.

BYND’s technical indicators are bearish. Source: FXEMPIRE

Year-to-date, BYND is down by more than 40%, with the lockdown affecting its performance in recent months. The MACD line is still below the neutral zone, while the RSI of 37 shows that BYND remains oversold.

Beyond Meat Crushed After Earnings Shortfall

Beyond Meat Inc. (BYND) is trading lower by nearly 20% on Wednesday after missing Q3 2021 earnings-per-share (EPS) estimates by a wide margin and issuing sharply lower Q4 revenue guidance. The alternative meat producer insisted the Delta variant marked a “major hindrance for a recovery in foodservice revenue” even though most customers, including McDonalds Corp. (MCD), are reporting healthy year-over-year results. BYND has now missed estimates in every quarter since Q1 2020.

Gloomy Outlook

The company also cited supply chain disruptions and worker shortages for the shortfall. Executives failed to discuss the ‘elephant in the room’, i.e. slower adaptation of their fatty but vegan product line by the consuming public. Everyone has tried their burgers and nuggets at least once at this point but it seems the majority has resumed their meat-eating habits. More importantly, this highly-processed, chemically-enhanced food isn’t that good for your health.

Credit Suisse analyst Robert Moskow downgraded Beyond ahead of earnings, noting “The revenue miss in 3Q ($106M vs guidance of $120M-$140M) reinforces our view that Beyond Meat is reaching market saturation faster than expected and will miss its internal growth targets. The meat alternatives category still has potential upside for the next several years, but we are lowering our long-term forecasts for Beyond’s sales and market share. This year’s spate of management departures and many factors cited for the revenue shortfall suggest deeper problems that won’t be quick to fix”.

Wall Street and Technical Outlook

The bottom has dropped out of Wall Street consensus, now standing at an ‘Underweight’ rating based upon 1 ‘Buy’, 1 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. More importantly, 6 analysts are recommending that shareholders close positions.  Price targets currently range from a low of $54 to a Street high $122 while the stock is set to open Wednesday’s session about $5 below the median $80 target. This placement suggests fair value but multiple downgrades are possible in coming sessions.

Beyond Meats came public at 46 in May 2019 and posted an all-time high at 239.71 just two months later. It tested the IPO opening print in March 2020 and turned sharply higher, stalling within 45 points of the prior peak in October 2020. A January buying spike reversed less than 20 points under the high, yielding a steady slide that hit an 18-month low in the pre-market. It’s now trading below the .786 retracement of the 2019 uptrend, exposing a decline into the 2020 low.

For a look at today’s economic events, check out our earnings calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Beyond Meat Lowers Its Third-Quarter Revenue Outlook, Causing Shares To Decline

The shares of Beyond Meat are down by roughly 14% over the past few hours after the company announced it had lowered its third-quarter revenue outlook.

Beyond Meat Lowers Its Q3 Revenue Outlook

Beyond Meat announced earlier today that it is expecting a lower revenue in its fiscal third quarter of the year. The company said it doesn’t expect to hit the earlier estimated levels due to certain events.

According to the company, it expects net sales of $106 million, which is lower than the previous outlook of $120 million to $140 million. Wall Street analysts had expected the company to generate around $133.1 million in its Q3.

Although Beyond Meat didn’t release a forecast for its quarterly earnings, the expected decline in its revenue has seen analysts estimate that it would lose 29 cents per share. The company revealed that numerous reasons led to the decline in its estimated quarterly revenue.

Chief amongst the reasons was the delta variant of the Coronavirus. Beyond Meat revealed that a Canadian distributor reduced its retail orders for a longer period than initially expected as its restaurants reopened. The company also expected an increase in orders, but that didn’t work out as one of its leading customers changed distributors.

Furthermore, the current labor shortages in the United States delayed the company’s distribution expansion and shelf resets. Beyond Meat also had to deal with some operational challenges, which has affected its activities. Its Pennsylvania facility lost potable water for two weeks while another outlet suffered water damage to inventory following severe weather.

BYND stock chart. Source: FXEMPIRE

BYND Down By 14%

The shares of Beyond Meat have been down by more than 14% since the US market opened earlier today. The decline comes following the company’s announcement earlier today that it expects lower revenue in the current quarter.

BYND had hugely underperformed since the start of the year. Year-to-date, BYND is down by 25%, with the Coronavirus pandemic affecting its activities over the past 18 months.

Why Beyond Meat Stock Is Down By 5% Today

Beyond Meat Stock Falls After Analyst Downgrade

Shares of Beyond Meat found themselves under pressure after Piper Sandler cut its price target for the stock from $120 to $95. Analysts stated that the company’s retail momentum lagged analyst expectations which warranted a lower target price.

Shares of Beyond Meat have been declining since early July when the stock failed to settle above the $160 level. The most recent earnings report beat analyst estimates on revenue but missed them on earnings. This report failed to provide support to the stock as the market was disappointed with the company’s third-quarter guidance.

At that time, Beyond Meat expected to report third-quarter revenue of $120 million – $140 million while analysts believed that the company’s third-quarter revenue would exceed $150 million. As the latest analyst action shows, worries about the third-quarter revenue persist and continue to put pressure on the stock.

What’s Next For Beyond Meat Stock?

Currently, analysts expect that Beyond Meat will report a loss of $1.14 per share in 2021. In 2022, the company is projected to report a loss of $0.42 per share. It should be noted that analyst estimates have been declining in recent months which is a not a good sign for a high-growth stock like Beyond Meat.

It should be noted that the stock traded as high as $221 at the beginning of this year when traders rushed to find the next “meme” stock, but Beyond Meat received little support at high levels and was in a downside mode for the most part of the year, except for a brief but strong rally in May – June.

It remains to seen whether the recent pullback will attract traders as the company’s third-quarter guidance was soft while earnings estimates continue to trend down. In addition, the stock suffered from several analyst downgrades in recent weeks. In this environment, Beyond Meat stock may gain additional downside momentum and get below the $100 level.

For a look at all of today’s economic events, check out our economic calendar.

Beyond Meat Could Sell Off into Double Digits

Beyond Meat Inc. (BYND) initially traded higher despite missing Q4 2020 top and bottom line estimates by wide margins on Feb. 25, attracting a large supply of bulls who promptly got trapped in a 21-point decline. The stock has continued to struggle in the last week and is now testing February support in the 130s, raising odds for a breakdown that relinquishes the last tranche of January’s vertical assault to an 18-month high.

Partnership with McDonald’s

Investors forgave the quarter and a profit warning after the company announced partnerships with McDonald’s Corp. (MCD) and Yum! Brands Inc. (YUM). The Mickey D. news, in particular, stoked buying interest after a failed trial of Beyond’s plant-based meat in Canada in 2020. However, pleasure turned to pain when the fast food giant “clarified’ the partnership, advising the McPlant burger would be limited to franchises that choose to carry the item.

BTIG Research analyst Peter Saleh reiterated a ‘Neutral’ rating after the news, noting “While the announcements are encouraging, we don’t anticipate much revenue from these partnerships in 2021, as the domestic quick service industry remains focused on core menu items and chicken, rather than plant-based meat. While we continue to believe in the long-term consumer adoption of plant-based meat, we don’t expect the Beyond Burger to be tested or make its debut in the U.S. in 2021, as McDonald’s and the industry remain focused on chicken.”

Wall Street and Technical Outlook

Wall Street has turned bearish on Beyond Meat’s outlook in the last year, posting a consensus ‘Hold’ rating based upon 2 ‘Buy’ and 8 ‘Hold’ recommendations. More importantly, four analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $112 to a Street-high $184 while the stock is set to open Wednesday’s U.S. session about $2 below the median $140 target.

The stock soared after coming public at 46 in May 2019, lifting to an all-time high at 239.71 in July. The wheels came off into 2020, with the momentum crowd jumping ship in reaction to insider selling and secondary offerings. It fell within two points of the IPO opening print in March and turned higher, posting three higher highs into January 2021 when it topped out just 19 points below the 2019 peak.  Aggressive sellers have taken control since that time, with a decline into the November low at 113.26 the path of least resistance.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Investors Lose Appetite for Beyond Meats After COVID-19 Eats Profits

Beyond Meat, Inc. (BYND) shares added to Monday’s losses in extended-hour trading, plunging 22.44% after the plant-based meats company reported quarterly results that fell short of the mark as the pandemic crippled restaurant sales and consumers stockpiled less meat alternative products.

The company reported a Q3 loss of 28 cents a share, with the figure falling well short of analysts’ forecasts of a 5 cent per-share profit. Moreover, the bottom line declined from 6 cents a share in the year-ago quarter. Revenues of $94.4 million also came in below expectations but grew 2.7% on a year-over-year (YoY) basis. The substitute meat producer’s U.S. foodservice segment, which includes restaurants and corporate catering, weighed heavily on the top line, falling 11% as consumers opted to eat at home during the health crisis. However, sales growth of 40.5% in Beyond Meat’s grocery unit helped offset the decline.

“We experienced the full brunt and unpredictability of Covid-19 on our net revenues,” CEO Ethan Brown said in a statement accompanying the earnings call. “Unlike the second quarter, where record retail buying and freezer loading by consumers offset the deterioration of our food service business…the long tail of retail stockpiling by consumers, coupled with continued challenges across the majority of our food service customers, led to [third-quarter] results that were lower than we expected,” he added, per Barron’s.

Through Monday’s close, Beyond Meat stock has a market capitalization of $9.4 billion and trades up a whopping 107.49% on the year. Over the past three months alone, the shares have gained nearly 20%.

Wall Street View

In recent months, the company has copped a barrage of broker downgrades. Analysts have grown increasingly worried about rival players in the sizzling alternative meat space. Look for souring sentiment across the Street to continue after the disappointing Q3 earnings. Also, news that McDonald’s Corp (MCD) has launched a test of its own plant-based burger – the McPlant, could trigger additional re-ratings.

The stock currently receives 3 ‘Buy’ ratings, 1 ‘Overweight’ rating, 10 ‘Hold’ ratings, 2 ‘Underweight’ ratings, and 6 ‘Sell’ ratings. Price targets fluctuate from as high as $178 to as low as $55, with the median target pegged at $136. This represents a 16.5% premium to Monday’s extended hours closing quote at $116.73.

Technical Outlook and Trading Tactics

Since reaching a 52-week high in early October, the share price has retraced back below the 50-day SMA. On Tuesday’s expected weakness, active traders should pay close attention to the $121 level. This is where the stock finds a confluence of support from a multiyear horizontal trendline and the 200-day SMA. A price reversal in this area could trigger a return of bullish sentiment, leading to a retest of last month’s high at $197.50 or even a test of the all-time high (ATH) at $239.71.

Beyond Meat Could Enter Major Downtrend

Beyond Meat Inc. (BYND) sold off at the end of June in reaction to a media report claiming that McDonald’s Corp. (MCD) has ended trials of the company’s popular plant-based burgers in Canada. A wave of downgrades followed the news, which still hasn’t been confirmed or denied by either party. If confirmed, the fast-growing food producer could have trouble growing business in their North American markets, denying a much-needed revenue boost.

Beyond Meat Growing Headwinds

Experts have raised concerns about questionable ingredients in their meatless products, which are being marketed as a healthy alternative to beef and pork. As the Harvard Medical School pointed out in 2019, the Beyond Burger is heavily-processed with high levels of saturated fat, which give the product its meat-like flavor. It also uses ‘refined’ coconut oil to replace the meat fat, high on the list of ingredients that should be avoided to maintain healthy cholesterol levels.

Citigroup analyst Wendy Nicholson downgraded Beyond Meat to ‘Sell’ last week, noting the company is a “leader in the plant-based meat market, benefiting from a well-known brand that has been developed in both the refrigerated meat section of the grocery store and in food service locations.” She then cautioned “we expect the company to face both near-term pressure as a result of its exposure to the food service segment and longer-term pressure as the category becomes more competitive”.

Wall Street And Technical Outlook

Wall Street consensus has grown increasingly bearish on Beyond Meat, which is currently rated as a ‘Moderate Sell’, with 2 ‘Buy’, 5 ‘Hold’, and 6 ‘Sell’ recommendations. Price targets range from a low of $68 to a street high $173 while the stock is now trading nearly $20 above the median $112 target. This positioning warns the company will need positive catalysts to maintain the current price, or risk selling off into double digits.

The technical outlook remains highly guarded, with price action now situated below the midpoint of the trading range carved since the May 2019 initial public offering. It’s also trading perilously close to the 200-day EMA, which was mounted in May after a steep first quarter decline, with a selloff through 120 likely to set off a variety of sell signals. The stock could head into double digits if that happens, putting pressure on current shareholders.