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Beyond Meat Is Surging After JPMorgan Upgrade But These 2 Food Stocks May Be Better Bets Now

Beyond Meat Is Surging After JPMorgan Upgrade But These 2 Food Stocks May Be Better Bets Now

Wall Street may have an appetite for fake meat, but these 2 stocks are a better option now according to two experts.

Shares of the plant-based meat alternative maker Beyond Meat (NASDAQ: BYND) jumped sharply Tuesday after JPMorgan (NYSE: JPM) upgraded the stock.

“We see three primary reasons for renewed optimism: the potential to acquire new food-service customers, continued strength in measured data, and valuation,” JPMorgan analyst Ken Goldman said in a note to clients.

“With cash-on-hand likely to exceed $300MM by the end of 3Q, another guidance raise potentially ahead, and the stock 40% off its high, we think the stock is appealing once again,” the analyst said.

The firm upgraded the stock to Overweight from neutral and raised its price target to $189, suggesting possible upside of 25% from the current price.

But while shares in Beyond Meat are heating up, two veteran traders say there are two other food stocks that look more appetizing now. 

Boris Schlossberg, managing director at BK asset management, is craving something a little sweeter than fake meat. 

“I think the way to play is actually through the retail stores,” Schlossberg said. “My favorite is actually Dunkin’ Donuts (NASDAQ: DNKN), which has been really highlighting Beyond Meat and the Beyond Egg sandwich very well and has also done a very good job merchandising.’

Schlossberg went on to say that Dunkin is “the right way to play it because it’s done a very good end-around McDonald’s (NYSE: MCD) and Starbucks (NASDAQ: SBUX), and I think it has some very, very strong momentum going forward.”

Oppenheimer’s Ari Wald agrees that food retailers make for a better play.

“We would prefer the food servers over the food suppliers, and the restaurant industry in general is really broadly strong here when we’re talking about McDonald’s, Starbucks, Wingstop (NASDAQ: WING), Dunkin’ Brands, Wendy’s (NASDAQ: WEN) and Restaurant Brands (NYSE: QSR), that’s what we’re looking for, those broad based themes,” Wald, Oppenheimer’s head of technical analysis, said.

While all of these names are outperforming the S&P 500 so far this year, Wald likes Wendy’s best out of the bunch and says the stock is showing signs of relative strength.

“Our analyst recently raised his target to $24 after recent management meetings, and the charts are supportive to [have a] really classic breakout here,” Wald said. “The stock got through $18 in April, came back tested that breakout in August, now turning higher again, new high in this mixed market tape, we see that as a sign of relative strength.”

Wendy’s shares are up just over 7% this week and nearly 36% year-to-date.

Source: TradingView.

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