CVGW - 3 Vegan Stocks to Buy Now: May 2024

2024-05-23 06:00:00 ET

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Targeting vegan stocks to buy carries with it a sector evangelism problem. There’s a tendency to believe that doing good for the environment through sustainable practices can lead to profitability sacrifices. However, that might not be true.

First, going the vegan route appears to be a positive for the environment . According to The Guardian , research shows that “vegan diets resulted in 75% less climate-heating emissions, water pollution and land use than diets in which more than 100g of meat a day was eaten. Vegan diets also cut the destruction of wildlife by 66% and water use by 54%.”

As for the profitability component, the World Economic Forum noted that Generation Z is e mbracing sustainability . Not only that, this age cohort is influencing other people. In other words, modern consumers will likely start directing their dollars toward green-friendly initiatives.

That should be a positive for the entire sustainability ecosystem. On that note, below are three vegan stocks to buy.

Kroger (KR)

To be upfront, Kroger (NYSE: KR ) isn’t a pure-play candidate for vegan stocks to buy. Rather, the Cincinnati, Ohio-based food and drug retailer is a powerhouse in the grocery industry. Now, Kroger features an in-store brand called Simple Truth , which focuses on organic and natural products. Under this unit, the company sells plant-based meat. I’ve tried it myself and I must say I’m a big fan.

What’s appealing about KR fundamentally is that should consumer economic pressures build, people won’t just be incentivized to shop more at Kroger, eschewing pricier calories acquired at restaurants or takeout. Rather, these shoppers will likely consider Kroger’s in-store brands like Simple Truth. They offer similar experiences to popular name brands but usually at lower prices.

It must be said that KR isn’t one of the vegan stocks to buy if you’re aiming to get rich. This is a slow-and-steady investment, as evidenced by fiscal 2026’s sales projection of $151.36 billion. That’s a very modest print compared to Kroger’s trailing-12-month ( TTM ) revenue of $150.04 billion.

Still, the company also pays a forward dividend yield of 2.16% and offers a permanently relevant business.

Mission Produce (AVO)

Based in Oxnard, California, Mission Produce (NASDAQ: AVO ) falls under the food distribution category. Per its public profile , the company engages in the source, farming, packaging, marketing and distribution of avocadoes, mangoes and blueberries. These products end up at retailers, distributors and food service customers in the U.S. and other international markets. Notably, Mission also offers merchandising and promotional support, along with market trend insights.

Financially, the company’s earnings performance has been uneven. However, when it hits, it hits big. A good example stems from the three months ended Jan. 31, 2024. Analysts anticipated that Mission would post a loss per share of six cents. Instead, the company posted earnings per share of 9 cents, yielding a positive surprise of 250%.

On a TTM basis, the food distributor posted net income of $6 million on sales of $999.1 million. For fiscal 2024, analysts project EPS reaching 29 cents on sales of $969.17 million. Last year, results sat at 19 cents EPS with a top line of $953.9 million. AVO is one of the small-cap stocks to buy or at least to keep tabs on.

Calavo Growers (CVGW)

Headquartered in Santa Paula, California, Calavo Growers (NASDAQ: CVGW ) is also another player in the food distribution category. Per its corporate profile , Calavo markets and distributes avocados, prepared avocados and other perishable foods to retail grocery and food service customers. Other clients include club stores, mass merchandisers and wholesale customers worldwide. Shifting trends toward healthier food options could make CVGW one of the small-cap stocks to buy.

One aspect that makes Calavo enticing for speculators is expert projections. Analysts rate shares a moderate buy with an average price target of $35.50, implying nearly 33% growth. That’s robust for an enterprise in a rather boring industry like food distribution. Further, the high-side target calls for $40, implying almost 50% upside.

Still, we’re talking about a riskier idea. During the TTM period, Calavo posted a net loss of $10.21 million on revenue of $966.79 million. Further, experts believe that in fiscal 2024, the company will post sales of only $587.66 million. That’s a steep drop.

Nevertheless, in fiscal 2025, a leaned-out Calavo could post EPS of $1.55, which would be a dramatic improvement.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

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