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Forget Beyond Meat (NASDAQ:BYND) and Buy This TSX Stock for Healthy Returns Instead!

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Are people going to stop eating meat on a mass scale? Unlikely. Are people going to gradually adopt a healthier lifestyle and give up meat? Probably. Are you going to miss out on an opportunity in this sector? Not if you are smart.

Beyond Meat has been one of the top stocks to own in the alternative meat segment. The stock has more than doubled since its IPO less than a year ago and is considered a solid long-term bet. However, it is not the only company targeting the plant-based meat market.

Maple Leaf Foods (TSX:MFI) is North America’s largest producer and distributor of meat with brands like Maple Leaf, Maple Leaf Prime, Schneiders, Mina, Greenfield Natural Meat Co, and others in its stables.

The company’s stock has taken a beating in recent times but this is a common trend across the globe as fears of Coronavirus keep growing and the large-scale effects of China’s handicap are being felt on a worldwide scale.

Maple Leaf has fallen to $22.6, almost 40% from its 52-week high and I think this presents a great buying opportunity.

Maple Leaf just reported its fourth-quarter and full-year results for 2019 and the numbers are very encouraging. Sales for the fourth quarter of 2019 increased 13.7% to $1.01 billion compared to $893.9 million in 2018.

Sales growth was driven by meat protein, supported by food renovation and growth in sustainable meats, and accelerated growth in plant protein. Net Earnings for the fourth quarter of 2019 were $17.5 million compared to $11.9 million last year.

Sales for 2019 were $3.94 billion compared to $3.49 billion last year — an increase of 12.8%. A major reason for this was robust sales of meat protein and accelerated growth in plant protein of 23.6% (excluding acquisitions).

Net earnings for 2019 were $74.6 million compared to $101.3 million in 2018. Strong commercial performance and favourable resolution of income tax audits were more than offset by strategic investments in plant protein to drive top-line growth and heightened volatility in hog prices.

Outlook for 2020 and beyond

Maple Leaf is aware of the trend that’s seeing customers trying to eat more sustainably. In 2019, it was the world’s first major food company to become carbon neutral. They are focusing on the development of sustainable meat and plant-based proteins.

The company results are particularly impressive when you take into account the fact that they had to battle global trade disputes, including China’s four-month suspension of Canadian pork imports and the short-term negative impact of the global outbreak of African swine fever.

Maple Leaf expects profitable growth in 2020 from its meat operations and has forecast plant protein revenues going up by 30%. In 2019, the company launched innovative products in these categories with the rollout of pea-based burgers, sausages and grounds, apart from their legacy products targeted at vegans and vegetarians.

The growth the company is experiencing in the meat protein group will be key toward their goal of a 14% to 16% adjusted EBITDA margin by 2022. It is this confidence in its business plan that led the company to increase its dividend payout from $0.145 per share per quarter to $0.16 per share per quarter, indicating a forward yield of 2.6%.

Analysts have given this stock an average target price of $31.44 for an upside of almost 40%! Once fears about coronavirus stabilise, Maple Leaf can be a great addition to your portfolio.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

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