Consumers staples stocks have largely fallen off the radar in recent weeks. Investors have been much more focused on the cloud computing sector after a hot week of tech IPOs. With the buzzy upstart companies like Snowflake (SNOW Stock Report) and Unity (U Stock Report) storming into the market, it’s easy to lose focus for a moment. The fear of missing out is probably part of our primordial instincts. If others are chasing a stock, they must know something that I don’t. Or … do they? The reality is, many of these tech stocks are trading at sky-high valuations. Some say that they are priced to perfection. What that means is that if there were to be slight misses in financial performance, the correction in the stock prices will be swift and possibly unforgiving. Only time will tell how the optimism in the tech sector will play out.
In the meantime, it is not a bad idea to focus on companies that are less cyclical. Consumer staples are items that people will continue to consume during good or bad times. In other words, these companies tend to be more defensive regardless of how the economy is doing. With consumer behavior suddenly changing in such a big way, many consumer staples are proving to be highly valuable especially during the coronavirus pandemic.
As traditional meat producers were facing issues during the height of the pandemic, plant-based meat stepped up to the challenge. But even before that, plant-based food sales in the U.S. had risen by over $1 billion between 2017 and 2019. Demand has also been rising in other countries. It is no surprise then, that companies are looking to cater to changing consumer tastes. Furthermore, the pandemic has brought health awareness into focus. For this reason, investors have been looking for the best consumer staples stocks to buy for potentially big gains.
Read MoreWhy Is Beyond Meat Sizzling?
There’s been a lot of hype surrounding Beyond Meat (BYND Stock Report), a leader in plant-based meat. Since BYND stock has more than doubled this year, some conservative investors are finding it increasingly difficult to justify. That’s understandable when its PE ratio is at a staggering 278. While it is hard to swallow the premium price tag of BYND stock, there is no denying the potentially explosive growth of plant-based products.
As Jim Cramer puts it: “Here’s the problem with Beyond Meat: it’s ridiculously expensive. Here’s what is great about it: it’s always going to be expensive. Why? Because it’s the future, and I like the future, and I believe in [CEO Ethan Brown]. Buy some here. I’d buy some lower.”
With Germany facing the African swine fever, Beyond Meat could be in a good position to capitalize on the shortage there. Separately, news of rival Impossible Foods facing regulatory setbacks in China has drummed up interests in Beyond Meat. Recall that Beyond Meat has already made good progress in the world’s most populous country. With these in mind, is BYND stock a buy or is it too much of a risk?Could Laird Superfood Be The Next Big Food Platform?
Laird Superfood (LSF Stock Report), a plant-based beverage manufacturer, made its public debut yesterday. Shares of LSF jumped 21.61% on its first day of trading, signaling strong investors’ interest in the plant-based food company. Or perhaps it is because the company went public at the time when the IPO sentiment is the hottest.
The company hopes to capture further market share at affordable prices. This strategy enables the company to cater to people who may be sensitive to cost-per-saving, while still maintaining a promise of only using natural ingredients.
“Consumers today are more health-conscious; they want to know what’s in their food, know that it’s made in an environmentally responsible way, and know that it’s natural, functional, nutrient-dense, tastes great and is affordable”. “We price our products for the mass market. Our goal is to make better products for all, from sunrise to sunset. We don’t talk about individual diets, we provide products for every diet.”- Paul Hodge, CEO of Laird Superfood
While some analysts see Laird Superfood a direct competition to Beyond Meat, I don’t think that’s really the case. Instead, they may possibly be complements rather than competitors. With higher consumer awareness in the plant-based diet, there’s a great chance that both BYND stock and LSF stock might move in the same direction over time.
Of course, I am only speculating here. Perhaps some consumers would like to have plant-based elements in their diet but have decided to choose either one of them. Of course, we will get a better idea only when these products take over the hearts and minds of a significant percentage of the populace. What do you think?