Why would I buy Beyond Meat for less than $ 35 after its release?

Beyond Meat, the food company behind the meatless Beyond Burger, is expected to debut in the public market this week. Jim Cramer of CNBC said on Wednesday that the title was worth buying – $ 35 or less per share.

The plant-based meat manufacturer has set the price of its shares at $ 25, which is in the upper end of the indicated range of $ 23 to $ 25. The stock could climb to $ 30 once it has started trading, and investors should be cautious if it climbs above $ 35, he said.

"I think it's exactly the kind of growth story that the stock market tends to adore.In the course of a year already rich in IPOs, Beyond Meat is the one who knows the fastest growth, "said the animator of" Mad Money ". "I doubt that this is another Lyft, where income growth was already slowing down when the company went public."

The company recorded a net loss of $ 29.9 million on a turnover of $ 87.9 million in 2018.

Since its creation in 2009, Beyond Meat has become one of the most dynamic food producers in the country thanks to a "great concept", said Cramer. The company's sales have almost tripled compared to the first quarter, following growth of 170% in 2018 and 101% in 2017, he noted. The turnover has grown 200% in the first quarter compared to last year, thanks to new agreements with Carlsands Jr., TGI Friday & # 39; s and A & W Canada, he added.

Beyond the meat has not yet generated profit and will probably not have a positive profit in the near future, said Cramer. But the gross margin tells a more promising story. The company posted a 20% gross margin in 2018, up from a negative margin in 2017. For the first quarter of 2019, gross margin was 25.6%.

"Honestly, I really do not want Beyond Meat to be profitable at this early stage of their life cycle, they should spend their money crazy to develop their production, distribution, and innovation to repel their enemies," he said. Cramer. "However, as the company's sales continue to grow, their margins are going in the right direction."

On top of that, the balance sheet is "solid," he added. The IPO has raised approximately $ 240 million.

The competition could be a headwind for Beyond Meat. Burger King, which belongs to Restaurant Brands International, offers the Impossible Burger vegetarian restaurant from Impossible Food, which is considered an alternative to beef tastier than the Beyond Burger, said Cramer. Reports suggest that Burger King sells vegetarian selection, but there is ample room for two players in the plant-based food industry, he said.

Beyond the meat, the products are sold in 17,000 grocery stores – including Whole Foods of Amazon, Target and Kroger – and in 12,000 restaurants, Cramer said. The company has also launched pork sausage substitutes and is working on an alternative to chicken.

"In the middle of its current price range, Beyond Meat is going to be very expensive – it is already trading 17 times more than last year's sales – no profit, but no sales," he said. . "Of course, [if] they can continue to grow at a rate of 200% this year, the stock is trading at less than 6 times the sales of 2019 [estimates]. So I can have that. "

WATCH: Cramer Reviews IPO Beyond Meat

Disclosure: The Cramer Charitable Trust holds shares in Amazon.