3 Plant-based food stocks with market expansion potential

Since I am very lactose intolerant, I eat a lot of plant based foods and drink a lot of plant based drinks. The data suggest that many more Americans, either because of lactose intolerance or for other reasons, are eating plant-based foods and drinking plant-based beverages. Indeed, “The (United States) plant-based food market grew from $3.9 billion in 2017 to $8.1 billion in 2023,” according to Institute for Good Food. With so many interested customers, plant-based food stocks are a solid buy.

The institute pointed out that growth was driven “by products that appeal to mainstream consumers by mimicking the taste, texture and functionality of conventional animal products.” Meanwhile, according to statisticallyglobal sales of plant-based meats are expected to grow from $10.15 billion in 2023 to $16.78 billion in 2028. For investors looking to profit from the latter trend, here three plant-based food stocks to buy now.

Oatly (OTLY)

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Oatly (NASDAQ: OTLY) specializes in making oat milk, although it has also expanded into desserts, yogurts and whipped cream.

Last quarter, in a very encouraging development, the company reported its first positive EBITDA, excluding certain items, in North America. In addition, its total revenue rose 3.9%, excluding currency changes, compared to the same period last year. The latter increase was driven in part by a 9.6% annual increase in sales volumes, measured in total litres. Additionally, the firm expects its revenue growth to be 5% to 10% for the full year. Finally, Oatly’s gross margin rose to 29% in the latest quarter, up from 19.2% in Q2 2023.

Also on a positive note, Oatly provided a major update on its Q2 earnings call last month. The company received “positive test results with China’s largest coffee chain.” The statement, to which he probably refers Luckin coffee (OTC:LKNCY), suggests that Oatly may benefit in the long term from being used by many of Luckin’s customers.

As Luckin had 18,500 stores, such a development could well be needle drivers for Oatly and OTLY stock.

All of this positive news makes Oatly one of the best plant-based food stocks to buy right now.

Ingredient (INGR)

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Ingredient 9NYSE:unpleasing) provide “essential plant-based proteins, starches, texturizers and other vital ingredients for vegan producers,” explained The Food Institute. The company’s Ultra Performance line contains up to 60% vegetable protein. It also improves the taste and texture of many foods, including plant-based foods and beverages, the company reported in 2022. It accomplishes the latter goal “using pea protein without the raw vegetable flavor,” Ingredion explained.

Ingredion’s earnings per share, excluding certain items, rose 24% in the latest quarter compared to the same period last year. Also on a positive note, its sales volumes rose 5% year-on-year, excluding the impact of the divestment of its South Korea business. The firm raised its 2024 adjusted EPS guidance to $9.70-$10.20 from $9.20-$9.85 previously. The Textures and Health Solutions unit includes dairy alternatives and products used to enhance the texture of meat alternatives. Their volume is up 8% since the beginning of last year.

The company launched two herbal products this year that I think have great potential. First, its clean-tasting dissolving solution is over 100 times more soluble than standard stevia. It also tastes better than “artificial sweeteners and other stevia ingredients” in consumer testing, according to the company. The product also “allows for 100% sugar reduction and is ideal for use in beverages, fruit preparations, syrups, liquid concentrates, bars and sauces,” Ingredion said.

Second, the firm unveiled a pea protein product that it says will preserve protein bars better than the plant proteins that are commonly used to preserve them.

Sweetgreen (SG)

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Sweetgreen (NYSE:SG), a restaurant chain specializing in serving salads, is not completely vegan. Unsurprisingly, it allows vegans and vegetarians to order a wide range of completely plant-based dishes such as Shroomami.

The company’s other offerings include Guacamole Greens (no chicken) and Cauliflower Curry (no chicken). Given the large number of vegetables and completely plant-based dressings and sauces that the company offers, I think there’s a good chance that many vegans and vegetarians in the US will eat there often.

In Q2, the company’s revenue rose 21% year-over-year to $184.6 million, while its same-store sales rose 9% year-over-year. Moreover, its EBITDA excluding certain items was $12.4 million, up from $3.3 million in Q2 2023.

Given Sweetgreen’s rapid growth and its high appeal to vegans and vegetarians, I see it as one of the best plant-based food stocks to buy right now.

At the time of publication, the responsible editor had (either directly or indirectly) no position in the securities mentioned in this article.

At the time of publication, Larry Ramer’s wife held a long position in LKNCY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.