Fundamentally, the narrative of pet care stocks to buy comes down to simple demand. Irrespective of consumer headwinds – and there are a lot of them – Americans continue to open their wallets for their pets. You really couldn’t ask for a better backdrop regarding investment opportunities.
Look, we all know that inflation along with elevated borrowing costs have crimped consumer sentiment. However, the beautiful aspect about pet care stocks to buy is that pet-owning households are digging in. That was one of my main arguments during an interview with CGTN America. Yes, people are hurting but they’re committed to their furry friends.
The numbers don’t lie. According to the American Pet Products Association, total national pet-related expenditures reached $147 billion last year. Consumers are still opening their wallets for their four-legged family members despite the pressures. And there’s no sign that this sentiment will fade. As a result, these pet care stocks to buy appear incredibly compelling.
Chewy (CHWY)
An online retailer of pet food and other pet-related products, Chewy (NYSE:CHWY) is simply on a roll. As Benzinga mentioned recently, CHWY stock gained more than 60% in the trailing month. At the end of May, the company started jumping due to a stronger-than-expected print in the first quarter. True, risks exist about holding the bag when it comes to high-flying securities. Still, the fundamentals are positive.
Looking at the matter broadly, e-commerce sales as a percentage of total retail transactions have been consistently rising since Q2 2022. As of the latest read (Q1 2024), the metric stands at 15.9%. At this rate, it will soon eclipse the record of 16.4% set in Q2 2020. Of course, that was when the world was under quarantine due to Covid-19.
Combine this dynamic with strong demand in the pet industry and CHWY appears awfully enticing. For the current fiscal year (2025), analysts anticipate a 167% jump in earnings per share to 24 cents. On the top line, sales could rise 5.5% to reach $11.76 billion. However, given the current state of affairs, the high-side target of $12.47 billion isn’t out of the question.
In totality, CHWY ranks as one of the pet care stocks to buy.
Trupanion (TRUP)
Specializing in pet insurance, Trupanion (NASDAQ:TRUP) presents an intriguing argument for pet care stocks to buy. During the Great Recession, household pets suffered the most, with their human owners abandoning them due to obvious financial constraints. While it’s not fair to compare that period to the present, we’re still dealing with significant headwinds. Yet the current generation of pet owners are committed to their furry family members.
Fundamentally, that should be a huge plus for TRUP stock. It’s not the easiest investment to consider since shares have slipped almost 10% year-to-date. However, it did manage to pop up on Tuesday’s session ahead of the Juneteenth holiday. It’s possible that Chewy helped lift all boats.
On the financial end, Trupanion did lose $26.77 million during the training 12 months (TTM). However, it managed to post revenue of $1.16 billion. Further, the current quarterly sales growth rate (year-over-year) stands at 19.4%.
For fiscal 2024, analysts anticipate a favorable reduction in red ink to 43 cents a share. Also, the top line could rise 13.8% to $1.26 billion. With a promising profile, TRUP is one of the pet care stocks to buy.
Petco (WOOF)
Just like the San Diego Padres which it sponsors, Petco (NASDAQ:WOOF) is in a rough position. That’s not meant to be some smart-alecky joke. Over the past 52 weeks, WOOF stock fell more than 58%. That’s just staggering considering how robust the environment is for pet care stocks to buy. Similarly, the Padres found themselves falling in the National League West division. Ouch.
Still, there may be some hope – at least for WOOF stock. In the trailing month, shares have gained over 41%. On a YTD basis, the security has gained almost 16%. That’s quite a sentiment reversal. Again, it’s possible that Chewy is helping to lift all boats in the sector. On Tuesday, WOOF gained over 5%. At least some of the enthusiasm can be centered on the possibility of a short squeeze materializing.
On a financial basis, Petco is in need of some help. During the TTM period, the company posted a net loss of $1.32 billion. Revenue during this cycle reached $6.23 billion. However, the current quarterly sales growth rate sits at 1.7% below breakeven.
For the current fiscal year, sales may actually decline by 1.8% to land at $6.15 billion. Analysts are pensive on the idea, with many seeing downside risk. Still, the fundamentals could get people excited about Petco and possibly WOOF stock. It’s a high-risk, high-reward wager.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
