Beyond Meat, the food company behind the meat-free Beyond Burger, is set to debut in the public market this week. CNBC's Jim Cramer said Wednesday that the shares are worth buying – at or below $ 35 per share.
The Plant Meat Producer Awarded His $ 25 shares at the top of his set range of $ 23 to $ 25. The stock could increase to $ 30 when it starts trading, and investors should be cautious if it climbs over $ 35. he said.
"I think this is exactly the type of growth story that the stock market tends to love. In a year that has already been full of IPO, Beyond Meat is the fastest manufacturer among them," said host "Mad Money". "I doubt it will be another lift, where revenue growth was already decelerating when the company came public."
The company reported a net loss of $ 29.9 million on revenue of $ 87.9 million in 201
Since its founding in 2009, Beyond Meat has become one of the fastest growing food producers in the country in the back of a "brilliant concept," Cramer said. The company's revenue about three times last year in the first quarter, following 170% growth in 2018 and 101% in 2017, he noted, revenues increased by 200% in the first quarter from the previous period, driven by new deals with Carl's Jr., TGI Friday's and A&W Canada chains, He added.
Beyond Meat has not yet made a profit and s Otherwise, it will not have positive earnings in the near future, Cramer said. But the gross margin tells a more promising story. The company recorded 20% gross margin in 2018, up from a negative margin in 2017. For the first quarter of 2019, the gross margin came to 25.6%.
"Honestly, I really don't want Beyond Meat to be profitable at this early stage of their life cycle. They should spend money as madness to build out production and distribution and innovation to stave off enemies," Cramer said. "But because the company's sales continue to grow, their margins are heading in the right direction."
On top of that, the balance is "solid", he added. The IPO increased to around $ 240 million.
Competition can be a wind blow for Beyond Meat. Burger King, owned by Restaurant Brands International, carries the Impossible Foods Vegetarian Impossible Burger, said to be a better tasting steak alternative than Beyond Burger, Cramer said. Reports suggest that Burger King sells out of vegetarian selection, but there is more than enough room for two players in the plant-based food industry, he said.
Beyond Meat products are carried in 17,000 grocery stores – including Amazon's Whole Foods, Target and Kroger – and 12,000 eateries, Cramer said. The company has also launched pork substitutes and is working on an alternative to chicken.
"In the middle of the current price range, Beyond Meat will be very expensive – it is already about 17 times last year. It's not revenue, sales," he said. "Of course, [if] they can continue to grow on a 200% clip this year, so the stock trades in less than 6 times 2019 sales [estimates]. So I can get it."
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