By wide margin, Beyond Meat (BYND) has become the hottest IPO of 2019.
Since May 2019, the stock has run from $45 a share to more than $208 a share. By the way, it hit that all-time high days before issuing its second quarter earnings.
However, this may just be the start of a much bigger run.
Analysts at Bernstein for example just initiated the stock with an Overweight rating, and noted that the alternative meat market could be worth more than $40.5 billion within a decade. Analysts at Research and Markets expects the market to increase from $4.6 billion to $6.4 billion by 2023.
Interesting to note, the company has long-term potential as more than 18% of Americans are now trying to eat less meat, according to the NPD Group, as noted by CNBC. Plus, there’s no shortage of consumer interest. Grocery sales of meat alternatives were up nearly 20% to $878 million for the year ended January 5, 2019, according to Fortune.
First quarter earnings results were already better than expected.
Total revenue grew 215% in the quarter thanks to an incredible surge from restaurant distribution channels, which helped drive gross profits 424% higher. It also achieved a gross margin of 25% in the quarter as well. Even better, management issued full-year 2019 guidance calling for revenue of at least $210 million – year over year growth of 140%.
Better, with sizable popularity of meat alternatives, Tyson Foods just confirmed it will introduce a meatless product in coming months. McDonald’s just began selling its veggie burgers in Germany. And Burger King just said it’s Impossible Whopper would go on sale this year.
All as the public just begins to change their tastes, and begin to eat less meat.
Plus, many companies are just beginning to notice there’s a shortage of veggie burgers to satisfy consumers at the moment. Big food companies are “setting up investment arms and emerging company areas, but it’s too little, too late, and they’re still trying to catch up with the curve,” said Lou Biscotti, national food practice leader for Marcum LLP, as quoted by Bloomberg.
With all of its excitement, it’ll be interesting to see just how explosive this stock could get.
Unfortunately, not all IPOs are this explosive.
It’s why – for years – we’ve always recommended buying shares of the First Trust U.S. Equity Opportunities ETF (FPX). In fact, we began recommending it in 2010.
As we’ve noted, this is one of the safest ways to trade an IPO.
Even with some of the most obnoxious IPO failures, the ETF managed to run from a 2009 low of around $11 to a recent high of $77. It’s a safer alternative than risking your hard-earned money to another potential flop. With the FPX, it doesn’t matter if the stock is hot or a dud, the excitement surrounding IPOs continues to send the FPX to new highs.
The next time someone attempts to convince you to buy a “hot” IPO, watch the FPX ETF.