Beyond Meat (NASDAQ: BYND), a company that makes plant-based burger patties, ground beef, and sausages, has seen an incredible rise since its IPO in May. The stock, which was initially offered at $25, now trades for $152, an impressive feat considering it has been on the market for less than half a year.
Trading volume was high on Thursday, following the announcement of a supplier deal with McDonald’s Restaurants.In a year when large brands like Uber and Pinterest debuted on the stock market, the real winner has turned out to be an underdog alternative meat supplier.
Burger Trial Could Lead to a Long-Term Deal
McDonald’s operates over 37,855 restaurants worldwide. It is estimated that the company serves around 68 million customers every day.
The burger giant announced on Thursday that it will sell a new P.L.T. burger (Plant, Lettuce Tomato) in a limited trial at 28 Canadian restaurants. The trial will run for 12-weeks from September 30, and Beyond Meat will be the exclusive supplier of plant-based patties.
Ann Wahlgren, VP of Global Menu Strategy at McDonald’s, said in a press release that “As customer interest in plant-based options accelerated rapidly, our curiosity piqued, too. We’ve kept an eye on this emerging trend and now we’re ready to learn more by running a test in one of our markets.”
Canada is the fifth largest market for McDonald’s, with just under 1,500 restaurant locations. It’s also a proving ground for new products that could be released in the United States, thanks to close cultural similarities and consumer tastes.
Investors are optimistic that the trial could lead to a long-term deal. This is what led to high volume trading on Thursday afternoon. Beyond Meat’s revenue increased 169.89% in the 2018 fiscal year. An ongoing supply deal with McDonald’s could boost that figure dramatically.
How Does Beyond Meat Look as an Investment Today?
The McDonald’s deal isn’t the only factor driving confidence in Beyond Meat stock. The company’s financials are also promising, thanks to rapid revenue growth in the last three years.
There is some competition from Nestle with a similar plant-based burger patty called the Awesome Burger, but Beyond Meat has an advantage in its distribution agreements with grocery chains like Kroger, Sprouts, Publix, and Safeway.
Stock is near the top end of its expected growth for the short term, so buying after a single day spike could be premature.
However, for investors who are willing to take on some risk and hold for the long term, Beyond Meat looks to have plenty of potential. It’s the most competitive alternative meat supplier on the market today, and that in itself is an advantage for this stock.
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