Global Market Comments
October 1, 2021
Fiat Lux
Featured Trade:
(WHY WATER WILL SOON BE WORTH MORE THAN OIL),
(CGW), (PHO), (FIW), (VE), (TTEK), (PNR), (BYND),
(WHY WARREN BUFFETT HATES GOLD),
(GLD), (GDX), (ABX), (GOLD)
Global Market Comments
October 1, 2021
Fiat Lux
Featured Trade:
(WHY WATER WILL SOON BE WORTH MORE THAN OIL),
(CGW), (PHO), (FIW), (VE), (TTEK), (PNR), (BYND),
(WHY WARREN BUFFETT HATES GOLD),
(GLD), (GDX), (ABX), (GOLD)
Global Market Comments
September 2, 2021
Fiat Lux
Featured Trade:
(MANY THANKS FOR YOUR CONCERNS)
(WHY WATER WILL SOON BE WORTH MORE THAN OIL),
(CGW), (PHO), (FIW), (VE), (TTEK), (PNR), (BYND)
Global Market Comments
April 22, 2021
Fiat Lux
Featured Trade:
(THE IDIOT’S GUIDE TO INVESTING),
(TSLA), (BYND), (JPM)
(TESTIMONIAL)
Mad Hedge Technology Letter
April 12, 2021
Fiat Lux
Featured Trade:
(SHOULD I BUY THE BEYOND MEAT DIP?)
(BYND), (KR), (IMPOSSIBLE FOODS)
Beyond Meat (BYND) will most likely retrace back to $90 from its current share price of $130.
The pandemic was a nightmare for most food companies and for the ones that deliver products to restaurants, it was a catastrophe.
BYNDs net revenues of $101.9 million in the fourth quarter of 2020, an increase of 3.5% compared to the fourth quarter of 2019, were in line with expectations of atrocious numbers.
Growth companies are expected to grow 40% year over year each quarter and in a year where many tech companies experienced 5 years of digital transformation in 1, BYNDs performance was quite pitiful.
It could have been worse for BYND.
The loss they experienced in the food service channel was difficult, but sales were partly made up by growth in net revenues in the fourth quarter driven by a 7% increase in volumes sold largely aided by the retail (this is what they call eating BYND burgers at home) channel.
Q4 retail channel sales were up a full 85% year over year, which helped mitigate the 54% year-over-year decline in Foodservice.
The pandemic’s damaging effect was large on supplying places including amusement parks, sports arenas, academic institutions, hotels, corporate catering services, and others.
The 85% uptick in retail growth couldn’t compensate for the drop off in food service channels much like Uber and the Uber Eats conundrum.
Households continued to buy BYND products, and they bought them more frequently.
On average, they’re spending more per household on non-meat products.
Another silver lining is in international retail, they saw a sequential acceleration of growth from Q3 to Q4.
International retail net revenues increased 139% year over year, driven mainly by distribution gains in Canada, including in the club stores, where they had no presence in the prior year.
As 2021 develops, we will see a flip in numbers as consumers start to visit their favorite eateries and are less inclined to grill BYND burgers on the patio grill.
This only injects more uncertainty into the numbers for BYNDs management and the headway they made in the retail channel could be mostly given back.
Naturally, BYND burgers just isn’t that software program that is essential, and the business of food tech is still fighting with the business of normal food like real meat such as cow-based beef and pig-based pork.
Many software programs simply do not have to duel with their analog selves which is why any sort of meaningful investments into a company like BYND is illogical.
Anyone who loves eating plant-based burgers should eat these protein-based burgers and leave the stock alone.
What’s on the horizon for BYND?
One word – competition.
Impossible Foods Inc. is planning to go public in the next year and is exploring either an initial public offering or a merger in a SPAC deal.
This would value the company at around $10 billion.
Once a hard-to-find item available at only expensive, trendy eateries, Impossible products are now on menus at national chains including Burger King.
Fast-food chains have fared significantly better than independent restaurants since the pandemic began, giving Impossible an added boost.
It has also been growing its grocery presence, cutting its suggested retail prices by 20% at U.S. grocery stores in February in its ongoing push to compete with real beef.
BYNDs management downplayed pandemic pressures to the business as “transitory”, but the problem with that is they are transiting right into fierce competition who have signaled willingness to enter into a price war against them.
Others like Kroger (KR) have bigger pockets and will have used the pandemic to plot their path against BYND.
Basically, what I am saying is that the first-mover advantage has disappeared forever, an unfortunate consequence for BYNDs future trajectory, and I don’t see a lot of upside to underlying shares in the short term.
In the short-medium term, Beyond Meat will first, need to rejuvenate their foodservice business and prove to investors that covid didn’t just knock it out.
Second, there is no guarantee that BYNDs food service will come back right away, this could be a hard slog for a few years to reach 2019 numbers and that’s still an if.
And third, they will need to prove they are better than Impossible Foods and the rest of them while most likely lowering the prices of their product.
Unluckily, the pandemic didn’t deliver 5 years of innovation in 1 year for BYND and there are more questions than answers moving forward.
Outside the internet, the presence of numerous physical inputs has the chance to go haywire which is why I sometimes believe the bore of buying Microsoft or Alphabet until death isn’t such a bad idea.
Investors might want to keep their tech investors from ever exposing themselves to real-world problems even if I think Uber is a great investment for 2021.
I would recommend investors to avoid this crowded space of food tech and let them cudgel each other down to zero. Whoever wins in the end might be worth a flier.
Global Market Comments
December 4, 2020
Fiat Lux
FEATURED TRADE:
(WHY WATER WILL SOON BE WORTH MORE THAN OIL),
(CGW), (PHO), (FIW), (VE), (TTEK), (PNR), (BYND),
(WHY WARREN BUFFETT HATES GOLD),
(GLD), (GDX), (ABX), (GOLD)
Mad Hedge Technology Letter
October 2, 2020
Fiat Lux
Featured Trade:
(THE JEWEL OF FOOD TECH)
(BYND), (WMT), (DIS)
I don’t get into food tech that often but one company that I have been highly bullish on that keeps delivering month over month is plant-based meat provider Beyond Meat (BYND).
The deals just keep rolling in for Beyond Meat as it announced that it had expanded its distribution deal with Walmart (WMT).
The all-American supermarket will now carry Beyond Meat in 2,400 of its stores, up from 800 before, and is a decisive victory for Beyond Meat whose non-animal-based meat is quickly becoming ubiquitous all over the U.S.
Their footprint is really expanding at a rapid clip because Walmart is actually the biggest grocer in the U.S. by sales. Now, Beyond Meat products will be in about half of the retailer’s U.S. stores.
The plant-based burger company has had a breakout year and has rallied nearly 120% as we speak and I recommended buying this stock in the low 70s.
That stock has made a double from that recommendation.
The first-mover advantage combined with the health pandemic has worked wonders for this company that hopes to supplant animal-based meat as the staple food for decades to come.
Now we are grappling with problems that every publicly traded company hopes to have – high valuations.
The current valuation is perceived as high because the growth engine powering Beyond Meat is clicking on all cylinders.
For companies like Beyond Meat, expanded distribution can immediately boost revenue because the capacity to deliver meat increases in an instant.
Beyond Meat typically recognizes revenue when products are delivered to retail and food-service locations, not when they finally sell through to the end consumer, so they have incentives to get their product in as many places as possible.
Beyond’s expanded distribution deal with Walmart validates the growth story to outside investors and legitimates the road map that management has aggressively targeted.
Beyond Meat’s latest move to expand the distribution of Beyond Burger meshes well with the company’s efforts to make its products more accessible across grocery chains.
It’s rumored that Walmart and Beyond have cultivated an extremely healthy working relationship setting the stage for more collaboration in the future and, of course, more products in the store window.
Beyond Meat’s frozen products were first launched at Walmart’s stores in 2015. Since then, the company has expanded its in-store offerings at Walmart to include Beyond Burger and Beyond Sausage in the in-person fresh meat section, while the Beyond Breakfast Sausage patties were recently added in the freezer aisle.
This is all while consumers haven’t absorbed the full scope of health benefits incurred by eating substitute meat products.
The pandemic has created a new generation of health-obsessed consumers and Beyond Meat is well placed to cater to such growing interests.
In fact, Beyond Meat has doubled down on being a leading provider of healthy plant-based meat alternatives whose products are made from simple ingredients.
The numbers speak for themselves as Beyond Burger contains 35% less saturated fat and has no added cholesterol, antibiotics, or hormones. It is also free of GMOs, soy, or gluten. Beyond Burger — made out of peas, mung bean, and rice — closely mirrors the taste of a traditional beef burger.
The stay-at-home food preparation revolution was catalyzed by the pandemic, relative deliveries to dining establishments have been killed off.
During the second quarter, strong retail channel sales volumes drove the company’s top line that surged 69% year on year.
The company’s efforts to expand and diversify retail channel offerings are likely to bear fruit. Last week, the company announced the expansion of its frozen Beyond Breakfast Sausage patties to more than 5,000 additional stores across the United States. The added distribution locations include grocery chains like Kroger KR, Harris Teeter, Target’s TGT Super Target stores, Publix. Earlier this month, the company launched Beyond Meatballs across grocery stores. Markedly, Beyond Meatballs marks the company’s third new retail product introduced in 2020, following the launches of Beyond Breakfast Sausage and Cookout Classic.
The one potential headwind to keep note of that could dampen enthusiasm for Beyond is the growing competition right around the corner that has led to various analysts to downgrade the stock.
JPMorgan was one of them citing market share loss at grocery stores to its biggest competitor, Impossible Foods Inc.
Analysts also cited waning volume at restaurants, which are slower to add “complexity” to the menu during the COVID-19 pandemic.
Other brands getting in on the fun are Morningstar brand, expanding its Incogmeato line of plant-based proteins with help from Walt Disney Co. (DIS), with the launch of Mickey Mouse shaped Chick’n Nuggets.
The item is meant to appeal to families and could create a market of lifelong plant-based meat eaters.
Dr. Praeger’s launched beef and chicken plant-based sliders this week.
Meatless Farm, a British-based food company, has landed in the U.S. And another global plant-based food company, Chile-based NotCo, is planning to bring its products to the U.S. after recently closing an $85 million round of funding.
Beyond is still a true growth stock and putting money in the early innings will harvest alpha.
Keeping tabs on the competition is something that any trader can’t ignore, and even though the moat isn’t that wide, if Beyond keeps operating at a high level, shares should be bought and held.
Global Market Comments
August 12, 2020
Fiat Lux
Featured Trade:
(THE IDIOT’S GUIDE TO INVESTING),
(TSLA), (BYND), (JPM)
Global Market Comments
June 16, 2020
Fiat Lux
Featured Trade:
(THE IDIOT’S GUIDE TO INVESTING),
(TSLA), (BYND), (JPM)
(TESTIMONIAL)
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