Beyond Meat (NASDAQ:BYND) and Kraft Heinz (NASDAQ:KHC) represent two very different ways to invest in packaged foods. Beyond Meat, which went public last May, attracted growth-oriented investors with brisk sales of its plant-based meat products. Kraft Heinz struggled with sluggish demand for its aging brands, but some value-oriented investors considered it a turnaround play.

Over the past 12 months, Beyond Meat's stock declined nearly 30% as Kraft Heinz's advanced more than 30%. Does that gap indicate investors are more impressed by Kraft's turnaround prospects than Beyond Meat's growth potential? Let's take a closer look at both companies to find out.

A grocery cart in a supermarket aisle.

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Is Beyond Meat's growth sustainable?

Beyond Meat has generated dizzying growth in recent years: Its revenue rose 170% in 2018, 239% in 2019, and 96% to $210.4 million in the first half of 2020, even as the COVID-19 crisis shut down businesses.

It mainly attributes its growth to partnerships with restaurants and retailers like Yum Brands, TGI Fridays, Subway, Starbucks, and Walmart, which quickly increased its exposure to mainstream consumers.

Beyond Meat isn't profitable, but its net losses narrowed in 2018 and 2019. In the first six months of 2020, its net loss narrowed year-over-year from $16.1 million to $8.4 million. It hasn't provided any guidance for the full year, but analysts expect its revenue to rise 60% and trickle down to its first full-year profit.

For fiscal 2021, Wall Street expects Beyond Meat's revenue to rise 52% and for its earnings to nearly quadruple. That outlook is rosy, but Beyond Meat still faces intense competition from rivals like Impossible Foods, which was valued at $4 billion earlier this year, and meatpacking giant Tyson Foods, which started selling plant-based products last year.

Can Kraft Heinz stage a turnaround?

Kraft Heinz brought back some bulls over the past year, but its stock remains down nearly 60% over the past three years. Kraft's organic sales dipped 1% in 2017, grew less than 1% in 2018, and fell 2% in 2019. Its adjusted EBITDA margin declined from 29.8% in 2017 to 27% in 2018, then contracted again to 24.3% in 2019.

A baked casserole of macaroni and cheese.

Image source: Getty Images.

Kraft's sales declined as consumers pivoted toward healthier foods and cheaper private-label competitors. It sacrificed its margins by reducing its prices, but the desperate move didn't boost its organic sales. It also took big writedowns on its weaker brands and cut its dividend.

On the bright side, Kraft is now led by a new CEO, and it's resolved its accounting issues from last year. Its organic sales rose 7% in the first half of 2020, due to pandemic-induced purchases, as its adjusted EBITDA margin expanded annually from 24.5% to 25.1%.

Kraft hasn't offered any guidance for the full year, but analysts expect its revenue to rise 3% as its earnings dip 10%. For 2021, analysts expect its revenue and earnings to decline 2% and 3%, respectively -- which suggests its pandemic-induced boost was temporary.

A growth stock vs. a value stock

Beyond Meat might have struggled over the past 12 months, but it still generated a near-400% return for its IPO investors. Investors are still paying a premium for its growth: The stock trades at nearly 11 times next year's estimated sales, and over a thousand times its forward earnings.

Kraft Heinz, on the other hand, trades at just 14 times forward earnings and pays a forward dividend yield of 4.6%. That low valuation and high yield might act as safety nets, but enthusiasm for the stock could wane once the pandemic passes and its old problems return.

I'm not too bullish on either stock right now -- Beyond Meat looks pricey, while Kraft's COVID-19 growth spurt could end as quickly as it started. But if I had to pick one over the other, I'd stick with Beyond Meat.

Beyond's ability to nearly double its revenue throughout the pandemic is impressive, and its growth could accelerate and topple expectations after the crisis ends. Kraft simply isn't as appealing, because many of its peers are generating more consistent growth while paying comparable dividends.

 
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.