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Meatless Meat and Profitless Stocks

Posted June 18, 2019

I happened to be in my local Whole Foods when the Beyond Meat rep was there displaying his product.

After buying a pound of the ground beef-looking stuff, I took it home and fried up some burgers in the skillet. The “meat” dripped fat and fried like a burger. It seared on the outside and was pink in the middle.

It tasted pretty good, close to a burger, with a real meat feel to it. My wife liked it more than I did, and my 16-year-old thought it was great, but she has biases.

The upshot is that the Beyond Meat burger isn’t as good as a real burger and not even close to a bone-in rib eye, but I can see buying some to placate the vegetarians at my next cookout.

But what I really care about is that it is driving stock prices.

A month and a half ago, the company behind this plant-based burger, a company called Beyond Meat, Inc. (NASDAQ: BYND), had an IPO.

It did well, running from $45 to $186. That’s 377% in a month and a half. It now has a market cap of $10.24 billion. It trades at 34 times sales.

It is vastly overpriced. The small float of 4 million coupled with short sellers kept driving the price up. When the lockup period expires and more shares flood the market, it will drop the share price and could afford a buying opportunity.

Pilgrim’s Pride — a company that makes real meat — has a market cap of only $6.24 billion.

The Obvious Buy

Tyson Foods (NYSE: TSN) is best known for its chicken products, which are made of meat. However, Tyson was savvy and bought a large chunk of BYND before the IPO.

CEO Tom Hayes saw the writing on the wall and jumped into the plant-based craze.

“Just as you see many different electric car models on the market right now, there won’t be a silver bullet — customers love choice,” Hayes stated in an August interview. “If we can grow the meat without the animal, why wouldn’t we?”

In 2016, Tyson made a 5% investment in Beyond Meat. Then Tyson bought more at the end of 2017 as part of a $55 million investment round.

Tyson stock is up 50% on the back of the BYND IPO, but it is a safer way to play it. TSN also pays a 2% dividend, has a P/E of 14, and is seeing slight revenue growth.

CORN

The price of corn is up huge this spring, as devastating floods have kept much of the farmland in the center of the United States underwater.

Corn prices hit $4.54 on Monday, the highest in five years. UPI reports:

"When the bomb cyclone hit Nebraska in March, that was really the beginning of the whole thing," said Gale Lush, a Nebraska farmer who serves as chairman of the American Corn Growers Association. "Then the rain started and it hasn't stopped."

According to the Agricultural Department, this is the slowest it's ever been for getting the crop in the ground, with just 92% of crops planted.

One way to play this trend is to buy the Teucrium Corn Fund (NYSE: CORN). The stock has already started to move, so you'd better be fast with this one.

Hain Celestial Group: The Turnaround Story

Hain Celestial Group (NASDAQ: HAIN) is down about 63% over the past three years.

Here’s the story. Hain went on a buying spree and took on a lot of debt in an effort to corner the vegan market with small, fast-growing companies. But some of these small companies got bogged down, while at the same time big companies launched competition in the organic space.

Then a hedge fund CEO, Glenn Welling, with 9.9% of the company, removed the founder and put himself on the board.

The question now is can Hain sell off its many products, achieve focus, and move forward? The company is looking for a new CEO, which could be the catalyst for a share price jump.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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