Vegan and plant-based companies may be of special interest to the investor looking to add some socially conscious investments to their portfolio. But many of these companies are young, untested and facing an uncertain future.
What are vegan stocks?
Vegan stocks are stocks from companies that market to vegans. Most of these companies are food manufacturers that specialize in vegan-friendly and plant-based products. The vegan diet excludes meat, dairy products, eggs and all other ingredients derived from animals. Dietary staples include fruits, vegetables, legumes and whole grains. Publicly traded companies that exclude animal products from their offerings may be considered vegan stocks.
Why invest in vegan stocks?
It’s a growing industry that’s adding companies that qualify as socially responsible investments, and more and more people are becoming interested in veganism. Between 2014 and 2017, vegans in the US grew from 1% to 6% according to Forbes. The global plant-based meat market — a hearty component of many vegan diets — was worth $12.1 billion in 2019 and is forecasted to reach $74.2 billion by 2027, according to a report from Meticulous Research. And with the Plant Based Food Association reporting that 29% of Americans now identify as flexitarians — shoppers aiming to cut back on animal-based food products — the plant-based food market is well-positioned to grow at a healthy rate. In addition to a positive growth forecast, vegan stocks qualify as a socially responsible investment. Socially responsible investments support companies that aim to have a positive social or environmental impact. This type of investing has become more popular in recent years and gives investors the opportunity to support companies and causes they truly care about. Whether you’re a vegan, vegetarian, flexitarian or simply want to support companies that refrain from selling animal products, vegan stocks are one way to introduce socially responsible investments into your portfolio.
What unique risks do vegan companies face?
The risks facing vegan stocks are the same risks that face many new, rapidly evolving industries: instability. This portion of the global food market is still small, to say the least. And while it’s definitely growing, it hasn’t proven itself long term. Many companies that specialize in vegan and plant-based products are startups. And startups are an inherently risky investment. There’s no guarantee these newer companies will stand the test of time, especially considering how the coronavirus pandemic has affected the way we dine. Beyond Meat — one of the biggest players in plant-based meat — sells half its products to restaurants. And a number of its competitors are in the same boat. In light of the pandemic, restaurants simply aren’t seeing the same numbers of patrons, even considering the shift toward takeout, pickup and delivery options. There’s no telling how the pandemic will affect the restaurant industry long-term. And with such a large cut of plant-based company sales going to restaurants, these companies will undoubtedly be affected. Veganism has begun to take root in American dietary trends, but these companies may be too new for the experienced investor to gamble on.
Vegan stocks
If you’re ready to add some socially conscious stocks to your portfolio, you have a few options. While most of these stocks are available on US exchanges, which makes them easy to purchase from common brokers like Robinhood and Chase You Invest, Else Nutrition and Burcon NutraScience are both listed on Canadian exchanges. To purchase international stocks, you’ll need to open an international share trading account.
See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.
Company summary
Beyond Meat, Inc., a plant-based meat company, develops, manufactures, markets, and sells plant-based meat products in the United States and internationally. The company sells a range of plant-based meat products across the platforms of beef, pork, and poultry. It sells its products through grocery, mass merchandiser, club stores, and natural retailer channels, as well as various food-away-from-home channels, including restaurants, foodservice outlets, and schools. The company was formerly known as Savage River, Inc. and changed its name to Beyond Meat, Inc. in September 2018. Beyond Meat, Inc. was incorporated in 2008 and is headquartered in El Segundo, California.
Tofutti Brands Inc. engages in the development, production, and marketing of plant based, dairy free vegan frozen desserts, cheeses, and other food products under the TOFUTTI brand in the United States, Europe, the Middle East, the Asia Pacific, and Africa. The company offers frozen desserts, including frozen sandwiches and chocolate wafers; ice cream sandwiches; dairy free vegan cheese products, such as cream cheese, sour cream, cheese slices, and dairy free ricotta cheese alternatives; spreads; and frozen food products. It sells its products through independent unaffiliated food brokers to distributors, as well as on a direct basis to retail chain accounts or to warehouse accounts that directly service chain accounts. Tofutti Brands, Inc. was founded in 1981 and is based in Cranford, New Jersey.
Historical performance
Stock information
Market capitalization: $3406602
PEG ratio: 0
Dividend yield: N/A%
Company summary
United Natural Foods, Inc., together with its subsidiaries, distributes natural, organic, specialty, produce, and conventional grocery and non-food products in the United States and Canada. It operates in two segments, Wholesale and Retail. The company offers grocery and general merchandise, produce, perishables and frozen foods, wellness and personal care items, and bulk and foodservice products. It also provides nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items, and confections under the Woodstock Farms Manufacturing name; organic, non-GMO project verified, and specialty food and non-food items under the Blue Marble brand name; pet food under the WILD HARVEST brand name; and various products under the ESSENTIAL EVERYDAY, SHOPPERS VALUE, Field Day, EQUALINE, CULINARY CIRCLE, and STONE RIDGE CREAMERY brand names. In addition, the company provides home, health and beauty care, and pharmacy products, as well as private label products through a network of Cub Foods and Shoppers retail grocery stores; and retail store support, pricing strategy, shelf and planogram management, advertising, couponing, ecommerce, consumer convenience, store design, equipment sourcing, electronic payments processing, network and data hosting, point-of-sale hardware and software, automation tools, sustainability, and administrative back-office solution services. Further, it offers consumer and trade marketing programs, and programs to support suppliers in understanding its markets. The company serves chains, independent retailers, and supernatural chains, as well as foodservice, ecommerce, conventional military business, and other sales customers. United Natural Foods, Inc. was founded in 1976 and is headquartered in Providence, Rhode Island.
Burcon NutraScience Corporation, together with its subsidiaries, develops plant proteins and ingredients for use in the food and beverage industries in Canada. The company offers Peazazz and Peazac, a pea protein for use in dairy alternatives, ready-to-drink beverages, dry blended beverages, bars, baked goods, and meat substitute products; Puratein, a canola protein isolate use for meat alternatives, such as burgers, sausages, and nutrition bars; and Supertein, a canola protein for use in non-dairy frozen desserts, egg alternative, plant-based marshmallows, and ready-to-mix beverages, whipped toppings, and plant-based bars. It also provides Nutratein, a canola protein comprising a mixture of globulin and albumin proteins for use in meat and egg alternatives, and other plant-based functional foods; and CLARISOY, a soy protein for use in sports nutrition beverages, citrus-based drinks, fruit-flavored beverages, lemonades, powdered beverage mixes, and non-beverage plant-based products. In addition, the company offers hemp protein isolates. The company was formerly known as Burcon Capital Corp. and changed its name to Burcon NutraScience Corporation in October 1999. The company was incorporated in 1998 and is headquartered in Vancouver, Canada.
Historical performance
Stock information
Market capitalization: $29128244
PEG ratio: 0
Dividend yield: N/A%
Company summary
Else Nutrition Holdings Inc. focuses on the research, development, manufacturing, marketing, and sale of plant-based food and nutrition products to the infant, toddler, children, and adult markets. It offers baby snacks under the HEART brand; baby feeding accessories, such as feeding bottles and disposable sterile nipples (teats); baby formulas; and nutritional drinks, as well as dried food snacks. Else Nutrition Holdings Inc. is headquartered in Tel Aviv-Yafo, Israel.
Historical performance
Stock information
Market capitalization: $121909312
Dividend yield: 0%
What ETFs track vegan companies?
Investors looking for a vegan-focused ETF may be pleasantly surprised to discover the U.S. Vegan Climate ETF (VEGN): the first publicly traded fund to focus on vegan investments. The U.S. Vegan Climate ETF holds over $18 million in assets and has an expense ratio of 0.6%. It’s a socially responsible fund that primarily filters out companies involved in animal products, testing, farming and animals used for sports or entertainment purposes. But the fund also exempts companies that:
Extract, refine or produce fossil fuels
Consume fossil fuels for energy
Have a significant carbon footprint
Have a history of environmental habitat destruction
Produce tobacco
Produce armaments and products designed for military or defense use
Have a history of human rights abuses
As of March 2020, the U.S. Vegan Climate ETF held 268 companies, including Apple, Microsoft and Facebook.
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Bottom line
For those ready to add some plant-based investments to their portfolio, vegan stocks represent an investment opportunity on the rise and gaining momentum. But most companies in this industry have plenty more ground to cover before they can be considered a stable investment. Review your platform options across multiple providers to find the brokerage account that meets your needs.
Frequently asked questions
Are Beyond Meat products vegan? Yes, Beyond Meat products are 100% vegan-friendly. How can something be considered a vegan stock even if they sell animal products? Vegan pure plays — companies that exclusively offer vegan products — are rare. In fact, most of the U.S. Vegan Climate ETF’s top 10 holdings are tech companies that don’t offer vegan products: like Intel, AT&T and Microsoft. A stock can be considered a vegan stock if it offers vegan or plant-based products or if it offers products that don’t exploit animals. But be careful: Some companies considered to be a vegan investment offering plant-based foods may also manufacture meat products. If you have strict ethical investing guidelines, investigate a stock before you purchase it to better understand what the company does and what it offers. What is veganism and how does it work? Veganism is a lifestyle characterized by the exclusion of animal products from material purchases and food consumption. Veganism aims to limit animal cruelty and the environmental impact of animal exploitation.
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Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio
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