Today we shall be looking at some of the top stocks that you can take advantage of as the pet industry continues to experience consistent growth. When it comes to making investment decisions, investors often think in terms of the sectors that can give them the best returns. More often than not, they end up purchasing stocks and ETFs in sectors such as technology, energy, and financial companies. Whereas the pet industry and its pet stocks have been overlooked over the years, they are actually performing quite well and are worth looking into.
Investors who are interested in building a diversified portfolio of stocks can have a look at what the top pet stocks are like, and maybe consider setting aside some money for this purpose. The pet industry has been experiencing some consistent growth, which is something that has helped drive the sales of various companies.
Here are some pet stocks that are worth investing in:
Chewy has managed to build itself a name in the pet industry for being a business that brings all pet products across the board to those who need them. The company operates as an online e-commerce platform that sells toys, food, collars, leashes, and pet medication.
As the culture of the inclusion of pets into families continues to thrive, so are all the businesses that are concerned with the well-being of pets. It all starts with the need for an extra toy, or leash, or better food. Eventually, families end up building spending habits that revolve around the existence of their pets.
Pet spending is definitely bound to benefit Chewy, in part because it is an e-commerce platform. If world e-commerce giants such as Amazon and Alibaba are to go by, one can tell that the future of e-commerce based companies is bright.
JM Smucker (SJM)
JM Smucker is involved with the development of a number of enterprises in different industries. Many investors who invest in its stocks barely get to know how involved it is in the pet industry. JM Smucker is behind the existence of pet-related brands such as:
- Meow Mix
- Kibbles N’ Bits
- Natural Balance, etc.
JM Smucker profits a great deal from the sale of pet food, which is actually a top income-earner overall. In the last quarter of 2020, this company’s retail pet food sales stood at $767.8 million (close to the company’s total revenue).
As much as the state of other industries also contributed to this company’s profitability, the role played by the presence of pet food in the line up of its income earners cannot be underplayed.
JM Smucker pays a dividend of 3.1% and has been raising it consistently for 19 years.
This is America’s second-largest pet insurance provider. It is valued at $1.2 billion as of now. The demand for pet health insurance policies has been on the rise, more so due to the increase in the costs of pet care. Pet owners spend an average of $257 on dogs and $182 on cats, for pet care.
In 2019, the number of insured pets rose by 16%, even as the premiums went up by 23%. Despite this rapid expansion of the pet insurance industry, only close to 1% of all pets in the USA are insured. Insurers anticipate significant growth, however, as the USA industry strives to match up the UK, where about 25% of all pets are insured. With a penetration rate of 25% in the USA, the pet insurance industry would open up a $32.7 billion opportunity.
Trupanion’s revenues in 2020 were close to $360 million. The company mainly benefits from the retention of its customers (with its 99% retention rate), as well as the existence of a monthly subscription model that makes it possible for it to collect high revenues.
This is a very popular name as far as pet health is concerned. The company has a market capitalization of more than $76 billion. Even as other industries battle the nasty effects of the pandemic, pet spending is still growing, and this makes Zoetis worth looking into.
Whereas office visits were lower in 2020, veterinary practice revenues were still positive. This further reinforces the fact that the consumers of products and services offered by Zoetis view their pets like family. These consumers would not let a member of the family suffer a heart attack unattended to, and that’s exactly how they would treat their pets.
In 2019, spending on vet care and products was $29.3 billion. Zoetis managed to bring in a decent income for its investors. Zoetis shares have actually managed to grow by 275% over the past half-decade, in comparison to the 71% growth experienced in the S&P 500.
Pet food has become as basic as human food in most family settings. Consumers have actually gone to the lengths of educating themselves about various pet foods, and are more willing to pay more for the premium products. There is an increase in the demand for pet foods with natural ingredients that are minimally processed. This is where FreshPet comes in. By the end of 2020, the company’s sales were well over $320 million, with this figure being expected to grow by more than 25% in 2021.
The consumers’ concern with the contents of pet food is facilitating the shift towards high-end and healthier options. This essentially means that there is a high likelihood for the growth of the value of FreshPet stocks in the foreseeable future.
PetMed Express (PETS)
PetMed is one of the companies that have managed to take pet care to the next level by helping pet owners access pet medication and prescriptions at the time that they need them. Most pet owners can attest to the fact that pet care costs are gradually increasing.
PetMed has been taking all the necessary steps to ensure that its customers are well-served. It has, for instance, created a reliable digital system that has helped more of its clients order their services and products online.
Despite the decline of its share prices in July 2020, PetMed’s dividends still increased by 3.5%, which is roughly 6 times the yield realized from the popular 10-year Treasury bond.
PetMed is a company that has decent earnings, no debt, and a price-to-earnings ratio of 21 (estimated value).
There you have it – the top pet stocks you can invest in this decade and beyond. I hope that you enjoyed this read. If so, don’t forget to share it with those who would benefit from the information presented herein. Also, let me know what your preferred alternatives to pet stocks are (if any).
I wish you well,
Eric, Investor and Team Member at Gold Retired!