Investing in Vegan Stocks

This post was originally published on this site

Updated: July 21, 2021, 6:20 p.m.

As a lifestyle and diet, veganism has been around for millennia, but it’s only recently that plant-based eating has become big business. Companies such as Beyond Meat and Oatly command multi-billion-dollar valuations. Packaged food titans like Tyson Foods (NYSE: TSN) are launching their own vegan brands, and start-ups such as Impossible Foods and Sweetgreen are racing to go public.

According to data from Allied Market Research, the global vegan food market is expected to post a compound annual growth rate of 10.5% through 2026, easily outpacing the overall food industry. And categories such as plant-based meat and oat milk are expected to grow at even faster rates. UBS (NYSE: UBS), for example, predicts more than 30% annual growth in plant-based meat, while research from Keefe, Bruyette & Woods expects the oat milk sector to grow by more than 13% annually.

Many factors are boosting the performance of plant-based stocks, including healthy eating trends, environmental concerns, the effects of economies of scale, and technology innovations. If you want to find some vegan companies to invest in, you have plenty of attractive options.

7 Top Vegan Stocks

These are our seven top picks for vegan stocks:

Company Market Capitalization Description
Beyond Meat (NASDAQ: BYND) $8.9 billion Innovative producer of plant-based substitutes for ground beef, sausage, and chicken.
Oatly (NASDAQ: OTLY) $13.3 billion Maker of oat milk and other plant-based dairy alternatives made from oats.
Calavo Growers (NASDAQ: CVGW) $1.1 billion Producer of avocados and other fresh fruits and vegetables.
Tattooed Chef (NASDAQ: TTDF) $1.6 billion Seller of plant-based frozen foods and ready-to-cook foods.
Laird Superfood (NYSEMKT: LSF) $261.4 million Maker of plant-based foods such as creamers, coffee, coconut water, and pili nuts.
Hain Celestial (NASDAQ: HAIN) $3.9 billion Diversified food producer known for brands such as Rice Dream and Celestial Seasonings.
United Natural Foods (NYSE: UNFI) $2 billion Wholesaler of organic and natural foods and Whole Foods’ biggest supplier.

Source: Yahoo Finance! and company reports. Market capitalization data current as of July 7, 2021.

Let’s take a closer look at each of these plant-based companies.

1. Beyond Meat

Beyond Meat is a leader in the plant-based meat substitute industry. Prior to the pandemic, Beyond Meat’s revenue was growing at triple-digit rates. The company’s products have become ubiquitous at supermarkets and common on restaurant menus. At the end of 2020, its products were available at approximately 122,000 retail and foodservice locations in 80 countries.

The company continues to innovate and introduce new products in the vegan meat substitute category, including, in 2020, Beyond Meatballs and Beyond Breakfast Sausage. Beyond Meat has historically spent heavily — around 10% of its revenue — on research and development, which should enable the company to hold its leadership position over time. The company excels at continually developing new products, advancing its technology, and making quality improvements.

2. Oatly

Oatly made a splash with its initial public offering (IPO) in May 2021. The Swedish oat milk brand has shaken up the plant-based milk category, as oat milk has recently passed soy milk to become the second-best-selling alternative milk after almond milk.

While Oatly has captured attention with a bold marketing campaign and a new product category in the U.S., the company is hardly new. It has been around since the 1990s and has been continually developing oat-based alternative dairy products, including milks, ice cream, yogurt, cooking creams, spreads, and to-go drinks.

Oatley’s products are now available in 60,000 stores and 32,000 coffee shops. Its revenue jumped by 106% year-over-year in 2020 to $421.4 million, although Oatly is currently unprofitable because it is spending aggressively on marketing.

3. Calavo Growers

Avocados are a staple of the vegan diet in much of the world, and they are popular with the millennial generation. About half of Calavo Growers‘ revenue comes from avocados, and growth in that category has helped the company’s stock price to triple between 2011 and 2020.

As a commodities producer, Calavo faces stiff competition, and prices for commodities such as avocados are constantly changing. But since it takes up to 13 years to grow a new avocado tree, and demand for the fruit is rising, the company is well-positioned for long-term growth.

Source: Getty Images

4. Tattooed Chef

If you’re looking for exposure to the massive plant-based frozen-food market, then consider buying shares in Tattooed Chef. The company went public through a special purpose acquisition company (SPAC) in late 2020 — yet another bullish signal for investors in vegan stocks.

Tattooed Chef’s revenue jumped by 75% year-over-year in 2020 to $148.5 million, and its products are now available in around 4,300 retail stores. Ninety percent of its sales come from its three biggest grocery customers, which is both a warning sign that customer concentration is a risk and also an indicator of the company’s growth potential as it continues to bring in new retailers as clients.

The company has gained traction with the Tattooed Chef brand, which has replaced private-label products as its biggest source of revenue. The company can charge more for branded products, although increasing the visibility of the Tattooed Chef brand is also obligating the company to increase its marketing spend.

Tattooed Chef is further aiming to build its e-commerce business, expand its product line, and grow internationally.

5. Laird Superfood

Vegan food lends itself well to niche categories, and that’s why Laird Superfood excels. Formed by the athletes Laird Hamilton and Gabrielle Reece, Laird Superfood makes plant-based coffee creamers, hydration products, beverage-enhancing supplements, and other drink products.

The company, which was established in 2015 and is growing, benefits from the high profiles of its founders. It focuses not just on plant-based foods but also nutrient-rich products. The Laird Superfood brand is associated with healthfulness much more than other vegan brands.

Laird aims to grow by expanding its presence with retailers and adding new product lines. The company’s existing products are serving what the company says is already a multi-billion-dollar addressable market.

6. Hain Celestial

Hain Celestial isn’t exclusively a vegan foods company, but its products skew toward plant-based, organic, and natural. Among its best-known products are Rice Dream and Almond Dream plant-based milks, Celestial Seasonings teas, Garden of Eatin’ and Terra chips, and Earth’s Best baby food. Hain has historically grown by making acquisitions, having bought many smaller, promising vegan companies.

In recent years, the company has been diversifying away from lower-margin and unprofitable products. Even though Hain’s revenue fell in 2020, its gross profit increased substantially, causing the company’s gross margin to rise year-over-year from 18.9% in 2019 to 22.7% in 2020. Hain appears likely to increasingly align its business around vegan products since they generally have higher profit margins.

7. United Natural Foods

As a wholesaler, United Natural Foods doesn’t exclusively sell vegan foods, but it does focus on organic and natural products. The company carries 275,000 products and its largest customer is Whole Foods, the supermarket chain that’s arguably done more than any other to advocate for healthy and plant-based eating.

United Natural Foods’ sales soared during the COVID-19 pandemic as it benefited from consumer demand shifting to grocery channels. The company aims to grow both organically and through acquisitions and has made several acquisitions in recent years, including purchasing two organic food companies.

Related investing topics

How do you find new vegan stocks?

There’s no easy way to track vegan stocks coming to the market, but an occasional search for terms such as “vegan IPO” and “vegan companies going public” should help you to discover new vegan stocks.

Is Impossible Burger publicly traded?

Impossible Foods, the maker of the Impossible Burger, is not currently publicly traded. Reuters reported in April 2021 that the company is planning its IPO within the next year.

Does Beyond Meat pay dividends?

Beyond Meat doesn’t currently pay a dividend. The company is unprofitable, and management has said that it does not intend to pay a dividend for the foreseeable future.

Recent articles

Why Nvidia Stock Jumped Today

After a short pullback following Nvidia’s recent stock split, investors went right back to bidding up the tech titan’s shares.

Joe Tenebruso | Jul 21, 2021

What’s Next for Nvidia After Its Stock Split?

Earnings for Nvidia are less than a month away.

Jose Najarro | Jul 21, 2021

Why Tesla Stock Popped Again Tuesday

A new rival just threw some shade on Tesla’s Model S.

Rich Smith | Jul 20, 2021

Is Nvidia About to Replace Intel in the Dow?

A shake-up among Nasdaq semiconductor stocks would be interesting to see.

Dan Caplinger | Jul 20, 2021

UBS AG (UBS) Q2 2021 Earnings Call Transcript

UBS earnings call for the period ending June 30, 2021.

Motley Fool Transcribers | Jul 20, 2021

Is Nvidia Stock a Buy Now After the 4-for-1 Stock Split?

Nvidia is a powerhouse semiconductor company involved in secular growth trends like gaming, cloud data centers, autonomous vehicles, 5G, and more. Is it a buy now?

Eric Cuka | Jul 20, 2021

4 Stocks to Buy This Week

Take a look at these four stocks while the market is red.

Jose Najarro | Jul 20, 2021

Why Is Everyone Talking About Nvidia Stock?

The world’s top discrete GPU maker remains a hot tech topic.

Leo Sun | Jul 20, 2021

Why Nvidia Stock Bounced Back Like a Superball Today

Morningstar has kind words for Nvidia today.

Rich Smith | Jul 19, 2021

This Segment of Tech Stocks Will Outpace the Rest Over the Next 4 Years

Most technology names should do well enough, but software companies are set to see the biggest increases in demand.

James Brumley | Jul 19, 2021

You Might Also Like: