We think recent analyst downgrades, negative profit margins and a stretched valuation make popular packaged food producer Beyond Meat (NASDAQ:BYND) best avoided now. However, the high demand for packaged foods and rising food prices should help Ingredion (NYSE:INGR), Herbalife Nutrition (NYSE:HLF), and Pilgrim's Pride (NASDAQ:PPC) outperform BYND in the coming months. Read on for details.The share price of popular plant-based meat producer Beyond Meat, Inc. (BYND) has declined 8.8% over the past month, and 9% over the past five days. CFRA analyst Arun Sundaram downgraded the stock recently because he expects the company to report higher losses in the coming quarters. Given the company’s weak growth potential, it looks overvalued at its current price level. In fact, BYND’s 15.48x forward Price/Sales is 881.2% higher than the 3.31x industry average. Consequently, Wall Street analysts expect shares of BYND to decline 13.9% in the near-term.
However, despite rising food prices, the demand for packaged food is expected to remain strong during the economic recovery period. Indeed, the global processed food market is expected to grow at 3.9% CAGR to reach $7.72 billion by 2026.
Given this backdrop, we believe fundamentally sound packaged food stocks Ingredion Incorporated (INGR), Herbalife Nutrition Ltd. (HLF), and Pilgrim's Pride Corporation (PPC) are well-positioned to outperform BYND in the near term.