Do You Need a Drink Too?

FDA

I’m on day nine of this diet, workout routine, and shunning of the alcoholic spirit. This will be a 60-day effort. And the deeper I go, the better that scotch looks whenever I read the news. Momentum is negative again today, the result of a massive switch over the last 48 hours. 

The markets don’t want to pick a direction, and capital continues to pour out of the small-, nano-, and micro-cap space. With so much money flowing, it sure is a blessing that Janet Yellen and Joe Biden are now proposing a massive financial surveillance state that will monitor your every financial move so that they can raise taxes and ensure you’re being compliant with the IRS (you know… for the children).

FDA Regulations

The story that didn’t quite make the radar for most people was the Food and Drug Administration’s (FDA) decision to delay any ruling on the future of e-cigarette company Juul. To protect the children, the FDA could outright ban the sale of Juul e-cigarettes, a decision that would cripple the company and its investors like Altria (NYSE:MO). 

Now, I have some pretty personal views about smoking. But I want to highlight something critical. Remember that e-cigarettes were originally supposed to be healthier and a better alternative than the pack. But the FDA is worried about the addictive qualities, the new health concerns around vaping, and… well… the children (always the children). 

That got me thinking about a wave of other companies in the world today that produced products that were supposed to be healthier for you. Yet, the deeper I dive, I find that they might actually be a real problem. 

Is Beyond Meat Junk?

Take Beyond Meat (NASDAQ:BYND). This company was supposed to provide you with a much better, more sustainable alternative to meat products. Who doesn’t want a nice plant-protein-based patty to replace that steak on your plate? 

Well, it turns out that Beyond Meat is pretty darn unhealthy. A 113-gram Beyond Meat patty has 250 calories, 18 grams of fat, 390 milligrams of sodium, and 20 grams of protein. And the volume of saturated fat is alarming. But what’s more hazardous to your health than the Beyond Meat patty? Its stock. 

Beyond Meat is currently trading north of $111 per share. That’s above the Wall Street consensus, and there don’t appear to be any major catalysts to support the thesis. Not only do I think this is a fad, I think it’s a matter of time before someone in the FDA decides to issue a warning that this is not it’s all it’s cracked up to be.  But if you’re looking for more concerns… look at the weak Piotroski F-Score of 1 (signally a weakening balance sheet). Look at the dismal profit numbers and the stretched valuations.

I have a friend who says that in today’s markets the fundamentals don’t matter. That is certainly true when we have mania as we did in 2000 and since the onset of the COVID-19 Bull market. But fundamentals matter when the markets are falling. With momentum in reverse, this is a stock that I worry about. It might not be enough to classify as junk food. But it’s a junk stock.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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