Avoid These 3 Popular but Overvalued Vegan Stocks
The vegan lifestyle has been gaining attention for a couple decades now, but has really risen in popularity recently due to health and environmental c...
The vegan lifestyle has been gaining attention for a couple decades now, but has really risen in popularity recently due to health and environmental concerns. This has led to a rise in vegan food and beverage products, but many of the stocks of companies that produce these products are overvalued. Beyond Meat (BYND), Oatly Group (OTLY), and Very Good Food Company (VRYYF) are three such stocks and should be avoided for now.
Veganism has significantly grown in popularity over the past decade. However, money is moving out of vegan stocks for several reasons. Profit-taking, general uneasiness, and supply chain issues are taking a toll on vegan stocks and the market as a whole.
Even if you eat vegan or are considering veganism, it might not be in your financial interest to put your money where your mouth is. Unless you are willing to abide by the tried-and-true buy-and-hold strategy, investing in vegan stocks is not the most prudent use of your money.
Beyond Meat (BYND), Oatly Group (OTLY), and Very Good Food Company (VRYYF) are three examples of overvalued vegan stocks quickly growing in popularity yet lacking in investing merit. Let's take a look at why investors should avoid each of these stocks.
Beyond Meat (BYND)
BYND's plant-based faux meat is likely available at a store near you. BYND has its fair share of intriguing vegan offerings, yet many of these meatless products are unsightly and nearly tasteless. BYND is establishing roots in China in an attempt to secure the allegiance of the most populous nation on the planet.
However, China's fickle totalitarian regime could quickly halt the company's operations at a moment's notice and without a valid explanation. Do not let the fact that BYND is willing to bend the knee to China influence your investing decisions.
BYND is a POWR Rating dud, grading out with an overall grade of F, meaning the stock is a Strong Sell. BYND has F grades in the Quality, Value, and Sentiment components of the POWR Ratings and a D Momentum Grade. Click here to learn more about BYND's grades in the Growth and Stability components.
BYND is ranked third-last out of the 79 stocks in the Food Makers industry. However, you can learn more about this industry by clicking here. BYND has a beta of 1.59, which indicates it is more volatile than the market.
BYND missed its most recently quarterly earnings expectations. The company's quarterly loss was 31 cents as opposed to the expected 23 cents. BYND executives provided guidance for third-quarter sales growth in the range of 27% to 48%. However, investors and analysts alike anticipated better sales growth guidance for the quarter ahead, prompting a selloff throughout the summer.
BYND's average downside potential in the past 15 months based on analysts' price targets has been -5.95%. Every potential BYND investor should be aware that the stock has a low price target of $68.
Oatly Group (OTLY)
This oat drink and dairy alternatives provider is based in Malmo, Sweden. The company's roots date back to the 1990s when its founders used Lund University research to create products void of animal byproducts.
OTLY has an overall grade of F and a Strong Sell rating in our POWR Ratings system. The stock has D grades in the Growth, Quality, Value, and Sentiment Components. Click here to find out how OTLY grades in the Stability and Momentum components. OTLY is ranked 36th out of 38 stocks in the Beverages industry. Investors are encouraged to click here to find the top stocks in the Beverage industry.
OTLY spiked much too quickly after going public earlier this year. Even if OTLY can increase production to meet the rising demand for oat milk, the company will still have to make headway in diversifying its offerings to become a true power player in the vegan space.
Very Good Food Company (VRYYF)
VRYYF received mainstream media exposure when featured on Canada's version of Shark Tank, known as Dragon's Den, back in 2017. This vegan cheese and plant-based meat business is based in British Columbia.
VRYYF has an overall grade of F, translating into a Strong Sell in the POWR Ratings. The stock has F grades in the Quality and Value components and D grades in the Momentum and Growth components. Click here to find out how VRYYF grades in the Stability and Sentiment components. Out of the 80 stocks in the Food Makers industry, VRYYF is ranked 76th.
Take a look at VRYYF's chart, and you will be dismayed. The stock has been on the decline dating back to January of this year. The problem with VRYYF is its vegan products aren't that much different from those of the competition. Do not invest in this vegan stock until it has a Buy rating or higher in the POWR Ratings and it proves it can capture additional market share or announce new vegan offerings that are distinctly different from the rest on the market.
BYND shares fell $0.85 (-0.79%) in premarket trading Friday. Year-to-date, BYND has declined -14.00%, versus a 19.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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