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There was a time when plant-based burgers and related food products were all the rage on Wall Street. The business-news media heavily covered the best vegan stocks to buy. Many pundits, including myself, wrote about the potential, future initial public offerings of rising stars within the sector such as Impossible Foods.
Many believed plant-based foods were a license to print money. But, unfortunately, the industry’s bold predictions turned out to be more sizzle than steak.
The IPO market has slowed, and investors’ demand for vegan stocks appears to have fallen off a cliff. Only the most ardent supporters are talking up the industry these days. It seems that it is in a deep freeze, much like the one that cannabis has faced, only worse because the vegan sector is smaller than the cannabis space on a global scale.
According to one estimate, the plant-based meat market will be worth $15.7 billion by 2027. Another forecast predicts that, in the same year, the cannabis market will reach $82.3 billion, more than five times the size of the plant-based meat space.
In December 2019, I wrote a column called the 7 Stocks to Buy to Ride the Vegan Wage. Even back then, you could see that a full-scale exodus of meat eaters to veganism wasn’t going to happen.
More than three years later, I’m tasked with coming up with three vegan stocks to buy for 2023. Here are my choices.
INGR
Ingredion
$102.15
HAIN
Hain Celestial
$18.86
MGPI
MGP Ingredients
$102.22
Ingredion (INGR)
Source: Shutterstock
Ingredion (NYSE:INGR) is the largest of my three vegan stocks to buy. It has a market cap of $6.7 billion, putting it solidly in the mid-cap-stock camp. Food companies come to Ingredion when they need ingredients to help their products fly off the grocery store shelves.
Based outside Chicago, Ingredion has more than 19,000 customers spread across 120 countries worldwide. Its ingredients are made in its 46 manufacturing facilities on five continents.
In Q3, its sales climbed 15% versus the same period a year earlier to $2.02 billion, with an operating income of $182 million, up from $172 million in Q3 of 2021. The company’s Specialty Ingredients segment generated 33% of the firm’s overall revenue in Q3 of 2022.
One of the growth catalysts for the Specialty Ingredients division is plant-based proteins. Using pulse-based proteins such as chickpeas, lentils, fava beans, and peas helps manufacturers create products with more protein, dietary fiber, and better texture.
In 2015, Specialty Ingredients accounted for 24% of the company’s revenue. By 2025, INGR expects the unit to generate 40% of its $8 billion of revenue.
The seven analysts who cover INGR have an average rating of “overweight” on the shares with a mean price target of $103.60 on the name, slightly above where it closed on Friday. Based on the midpoint of its guidance, the company is calling for full-year earnings per share, excluding some items, of $7.18. Its shares trade at a reasonable 14.3 times its earnings.
It’s a relatively safe way to lean into the vegan and vegetarian movement.