Pet Stocks

The Best Pet Stocks to Buy

Do you trade pet stocks? Did you know that Americans are spending more every year on their pets? In the US, 66% of households own a pet, up from 56% in 1988. In 2022, pet expenditure reached $136.8B, expected to grow to $143.6B in 2023.

People care about their pets, like their family, and are ready to spend as much as needed to keep them healthy. Dog owners spend, on average, over $700 per year.

Pet products are recession-proof and recurrent purchases. Pet product sales increased during the 2008 financial crisis and the COVID-19 pandemic. Whether you are a pet owner or not, the pet industry might be an exciting investment option. Here’s how to invest in this industry.

Did you know you have options for pet stocks? Since it’s such a booming industry, these stocks could be great to trade. And invest in. Here is a list of pet stocks to watch.

  1. PetIQ ($PETQ)
  2. Trupanion ($TRUP)
  3. Neogen Corporation ($NEOG)
  4. Petco ($WOOF)
  5. Freshpet ($FRPT)
  6. Patterson Companies ($PDCO)
  7. Chewy ($CHWY)
  8. Zoetis INC ($ZTS)
  9. IDEXX Laboratories, Inc. (NASDAQ: ID
  10. ProShares Pet Care ETF (BATS: PAWZ)

We’ll delve deeper into some of these stocks below with analysis and news.

1. Chewy (NYSE: CHWY)

Chewy is first on this pet stocks list. It’s an online pet food, accessories, and health product retailer. With more than 3,500 brands, their products are for cats, dogs, small animals such as rabbits, birds, horses, fish, reptiles, and even farm animals such as chickens.

Chewy gained in popularity during the pandemic. Being stuck at home, many decided to get a pet and treat them to a good life. With Chewy, you can buy everything for your pet online and get discounts on recurring purchases. 

Since 2018, Chewy has been increasingly profitable yearly, and revenues have grown constantly. Chewy was in the same boat as many other pandemic stocks at the pandemic’s peak. Their numbers were unsustainable for a post-pandemic life. Despite having fewer active users in 2023 than in 2022, the company recently posted better-than-expected revenue numbers and a surprise profit.

Management is still optimistic about the future, but they said inflation is causing their customers to switch to lower-quality pet products. Chewy also faces increasing competition from Amazon, Walmart, and other online retailers. The stock is currently at an all-time low due to uncertainty in this industry. Is it a good time to buy?

Pet Stocks

2. Zoetis Inc (NYSE: ZTS)

Have you heard of Zoetis? It’s the pet stocks equivalent of Pfizer, which was once its subsidiary. Zoetis is the world’s largest producer of medicine and vaccinations for pets and livestock.

During the pandemic, the company benefitted just like Chewy and ran into some trouble as well. However, healthcare can’t be compared to food and accessories. You want your animals, especially livestock, to be in the best shape possible.

Furthermore, Zoetis has been expanding into new markets. It has been granted regulatory approvals for medicine treating new diseases. The company is spending its R&D resources on new treatments and technology to keep your animals healthy.

Since 2010, Zoetis has always been profitable and its revenues have only decreased once YoY. The company is creating products with higher profitability ratios and is working with more and more skilled veterinarians.

If that’s not enough to convince you, Zoetis also rewards its shareholders with a 0.79% annual dividend yield. If the company’s operations grow as expected, it might be worth a lot more in the next few years. However, there are still some questions and hurdles to address.

3. IDEXX Lab. (NASDAQ: IDX)

IDEXX Laboratories is another one on our pet stocks list. They have been around since 1983, but their growth has surged in the last decade. The company develops, manufactures, and distributes products, equipment, and services for pets and livestock.

They can detect diseases and infections and treat them. IDEXX also offers veterinary practice management and consulting services.

Not only does it perform diagnostics for animals, but it also does for humans and water globally. An estimated 40% of its revenues originate outside the US.

How has IDEXX performed in the last decade? EPS and revenue have increased yearly, growth and many key metrics have consistently grown as well. Management is also very optimistic about the future and has raised its expectations.

In 2023, revenue is predicted to increase by almost 10%. However, IDEXX stock isn’t cheap. At the moment, one share costs over $511. Be ready to spend quite a bit if this stock interests you. 

3. Freshpet Inc (NYSE: FRPT)

Freshpet is an American pet food company. Their products are made from fresh ingredients and natural farm-raised poultry, beef, or fish. They have to be refrigerated.

Freshpet may not offer as much diversity as the other companies above, but their financials are strong. Since 2012, revenue and gross profit have grown steadily. The company is slowly gaining market share and is well-positioned to keep growing.

Before investing in other market segments, such as pet accessories, and attempting to penetrate the livestock market, Freshpet has to make a name for itself. 

4. Trupanion Inc (NASDAQ: TRUP)

We conclude today’s list with Trupanion, a pet insurance provider for dogs in the US, Canada, Australia, and Puerto Rico. I won’t get into the specifics of the insurance industry, but you can see how it can be a lucrative business.

Despite troubles with inflation in the pet industry and veterinarian costs, Trupanion is still doing well. Regulators in New York and California recently approved rate increases of 18% and 12%, respectively. 

In the first quarter of 2023, the number of enrolled pets under Trupanion increased by 28% YoY. Revenue also increased, but the company remained unprofitable due to veterinarian costs. With the rate increases, Trupanion is looking to bounce back in the next quarters and deliver stronger financial results.

5. ProShares Pet Care ETF (BATS: PAWZ)

I was surprised to find a pet care ETF to include in our pet stocks list. ProShares offers one with many companies mentioned above. IDEXX (10.39%), Zoetis (10.25%), Freshpet (9.75%), and Chewy (5.98%) are among its top 5 holdings. The pharmaceutical and biotechnology sectors weigh the most in his fund (30.35%). This ETF also offers a dividend but varies based on the fund’s performance. 

Since its inception in November 2018, PAWZ ETF is up 23%. Its results were strong during the pandemic but have slowed down since. If you believe in this industry and don’t want to invest in one stock, this ETF offers a good mix of stocks in the pet industry.

Final Thoughts: Pet Stocks

To conclude, there are various ways to invest in pet stocks. This article included many pet food companies, pharmaceutical companies, and even insurance companies. Nowadays, more households have pets than children, which might make it the best time to invest in the pet industry.

Before researching the pet industry, I didn’t know there was such a market for pets and livestock. There is still a lot of potential, and many companies will grow even more in the coming years. 

Frequently Asked Questions

PETS has a buy rating currently. However, the may not be one of the pet stocks to watch intently. 

Pet stocks make up an industry that generates billions. As a result, keep an eye on pet stocks with growth potential.

The pet industry continues to grow. Chewy's revenue has increased almost 5o% and continues to grow. 

PetSmart continues to be profitable and signs of continued growth. This makes it a good investment.

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