Beyond Meat (NASDAQ:BYND) is an up-and-coming industry disrupter with an uncertain -- but promising -- future. Its business has flourished despite the pandemic, which shows just how competitive it is. Nike (NYSE:NKE) is a leading athletic wear company. It's seen a dip in sales due to COVID-19, but it is also seeing strength in its digital segment even as stores reopen. 

Both of these companies are hot stocks at the moment with the potential to deliver high gains for investors. But which one is the better pick today?

Beyond Meat: A wide-open field

Companies have been selling meat alternatives for decades, but they've usually been of interest to just a select group of vegetarians and/or health mavens. Today, overall food trends have been moving toward plant-based products as more of the general public looks for healthier foods with greater nutritional benefits. With companies like Beyond Meat, Impossible Foods, and others entering the market, plant-based foods are becoming more mainstream.

Beyond Meat garlic sliders.

Image source: Beyond Meat.

Beyond Meat stock is still in its infancy, having debuted in 2019, but yearly sales have increased from $16.2 million in 2016 (while it was still a private company) to $297.9 million by the end of 2019.The company has established important partnerships to better distribute its products and offers plenty of product options to suit different budgets, with a recently introduced family pack sold at Walmart and Target.

The company continues to see skyrocketing revenue each quarter, and it's finally is beginning to turn a profit.

Metric

Q1 2020

Q4 2019

Q3 2019

Q2 2019

Revenue growth (YOY)

141%

212%

250%

287%

Earnings per share

$0.03

$(0.01)

$0.06

$(0.24)

YOY=year over year. Data source: Beyond Meat quarterly reports.

There are several factors contributing to the fantastic growth, including increasing distribution points, more products, and higher sales volume.

Growth did slow in the first quarter, which included a decline in sales to foodservice establishments, as COVID-19 had some effect on sales. But its consumer business remained robust.

Nike: A company that's taken root

Nike is the dominant player in athletic wear and continues to increase sales as activewear overtakes casual as the American dress code. The company has built on its original sneakers to create the largest athletic shoes and apparel company in the world by revenue.

Man running in Nike sneakers.

Image source: Nike.

However, the company saw a massive decline in its fiscal 2020 fourth quarter, which ended May 31 and covered most of the global lockdown. Sales decreased 38% year over year, and the company showed a loss of $790 million.

Nike's not slowing down, though, and has released new products and opened stores while it picks itself back up. It is taking a pragmatic approach, though, streamlining inventory to match current demand. This will protect the company from diluting its brand with too many promotions, but it implies that sales won't pick up in the immediate future. 

In the meantime, Nike is doubling down where it can, which these days is with its digital sales efforts. Nike's digital sales have been on the increase, and they shot up while brick-and-mortar stores were closed. 

Metric

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Digital revenue (YOY)

75%

36%

38%

42%

YOY = year over year. Data source: Nike quarterly reports.

Digital numbers have continued to increase even with stores having reopened, with triple-digit percentage increases in May.

Which one is the better buy?

Beyond Meat shares have delivered 70% gains for investors year to date, while Nike's share price has fallen 4.5% during the same time period. However, while Beyond Meat's current share value is down about 46% from its 2019 high, it still has several years of projected growth baked into its stock price, as evidenced by its forward one-year price-to-earnings ratio sitting above 200. 

Nike's had a tough quarter in the current retail atmosphere, but it's crawling out from under declines and building on what it does best. The share price has a more modest forward one-year price-to-earnings ratio of 30.

Beyond Meat, while the leader in its field, still faces heavy competition from companies that create similar products, while Nike has an almost unpassable lead in its industry. I'd stick with Nike for a more certain long-term stock pick and a better buy.