Don't bet on Beyond Meat (BYND) - Get Report to bring home the bacon for investors, especially after its big run-up.

Instead, try agribusiness company Corteva Inc (CTVA) - Get Report , which was until recently part of mega chemical company DowDuPont (DWDP) - Get Report . At the same time, lighten up on makers of plant foods such as Mosaic (MOS) - Get Report .

Here's what you need to know.

Avoid the Obvious

First, avoid the obvious when it comes to the meatless protein sector.

Indeed, Beyond Meat, which went public in May, as well as privately-held Impossible Burger, are changing the face of food. Both companies focus on providing nutritious protein that resembles and tastes like meat, but doesn't involve killing animals.

Revenues for Beyond Meat have grown at a startling rate, reaching $115 million in the latest 12 month period, or more than three times the $33 million total for 2017. At the same time, supplies of the Impossible Burger's meatless meat are running short in fast food chains such as Red Robin and White Castle. In other words, hungry people can't get enough of the stuff.

Meat-processor Tyson Foods (TSN) - Get Report , also says it's getting in on the act by adding a new line of plant-based products. 

Over time, the focus on reducing greenhouse gases and healthier eating should help boost this nascent industry.

However, those firms shouldn't necessarily be the first choice for investors. Beyond Meat, which hasn't yet made a nickel, trades at a staggering 75 times sales. That takes over-valued to an absurd level. Impossible Burger is private, so there is no public stock to buy yet. Last month the firm said it raised $300 million ahead of a possible public offering, but the company said it is "not in a rush" to IPO.

Tyson Foods is a possible alternative, but hardly a pure play. Last week, the firm announced it would get into the same business selling plant-based nuggets this summer. It said the business line could eventually generate $1 billion in revenue, which sounds good until you realize that the company's total revenue already tops $40 billion. In other words, the new business line may or may not make enough difference for investors, at least not in the short term.

Down the Literal Food Chain

The key to figuring out how o profit from the trend towards plant-based "meat" is to look down the literal food chain.

These new-fangled proteins are made using a variety of plant products, including pea and soybean protein as well as various oils from plants such as coconuts and sunflowers.

As with all arable farming, the process starts with the seeds. Some seeds are better than others and sell for a higher price than do less desirable seeds. That means we need to look for the companies that have a history of developing seeds that farmers will buy.

"I would say it is a question of who produces the best seeds," says Don Coxe, chairman of Chicago-based financial firm Coxe Advisors.

For instance, Monsanto, now owned by multinational chemicals company Bayer AG (BAYRY) , developed corn seed that is resistant to weed killer. This so-called Roundup-ready corn seed is now the staple for corn growers and commands a higher price than do many other corn seeds. Given the company's history in grain product development, Bayer may be worth taking a chance on. However, just like with Tyson, it's not clear whether one new product line aimed at plant-based meat will move the earnings needle much in the short term.

On the other hand, Corteva, which is purely in agribusiness, has a seed division. The firm boasts "integrated and greatly expanded solutions that combine genetics, chemistry and precision agriculture." Such solutions include pesticides, and most notably for these purposes, soybean seeds, one of the key ingredients for Impossible Foods' meatless burgers. 

If the meatless-meat trend continues to grow, look to Corteva to develop increasingly sophisticated seeds and other products to help feed the plant-based protein food chain. That also means that investors will likely profit whether or not Beyond Burger or Impossible Burger ultimately succeed.


Fertilizer, a.k.a. plant food, has long been a mainstay for investors in the farm patch. However, the meatless burger trend would seem to undermine that effort, Coxe says. That's because farm animals for meat production typically get fattened with grains, which need a lot of fertilizer.

Put another way, your half-pound meatless burger requires a lot less harvested grain than a half-pound beef burger. And in turn that plant-based meal requires a lot less plant food. As a result, we can expect companies like Mosaic to see demand for their plant food wane over time.

The firm sells a variety of fertilizers and related products including phosphate and potash. Almost three-quarters of its revenue comes from outside the U.S.

The recent slump in the farm belt hasn't been kind to investors in Mosaic. Total returns for the shares, which includes dividends, were minus 23% over the 12 months through Friday, according to Morningstar. As grain prices drop, so does the demand for fertilizer. That's normal in a cyclical business such as farming and Mosaic will likely continue to serve the farm belt.

But if plant-based burgers and other dishes become a smash hit in the diner, then eventually fertilizer demand will probably get dented in a permanent way.

Constable owns none of the securities listed in this story.