Taking a Bite of Beyond Meat

Ed Ponsi

Right now, we are seeing a surge in Covid-19 infections. It's time to consider which stocks are likely to be most affected by this spike. 

We know that meat processing plants have been a hotbed for coronavirus infections. 

In April, the pandemic led to the closing of multiple meat-processing facilities in the U.S. Closures by Smithfield Foods and Tyson temporarily disrupted the meat supply chain in some parts of the country. 

Could we see similar shutdowns in July? If we do, one company that stands to gain is Beyond Meat, a maker of plant-based meat substitute products. Let's go to the chart to analyze this stock. 

BYND

In mid-March, this stock traded below $50. Then shares of Beyond Meat tripled in value in just three months. Now the stock is pulling back to levels where I'd consider buying. 

Beyond Meat has spent the past two days resting on its 50 day moving average (blue). I'll initiating a small position here, equal to one-third of my normal position size (point A)

My plan is to add another one-third if Beyond Meat falls to $121.75. That level represents a 38.2% Fibonacci pullback of the March-June rally (point B).

Finally, I'd add the last third of the position if the stock drops to the 200-day moving average (red), which currently rests near $105 (point C). 

If all three entries are filled, I'll have a normal-sized position in Beyond Meat with an average cost basis of about $120. I'll exit the position if the stock drops below its 61.8% Fibonacci level, which is around $94. 

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