Pet stocks are an exciting way to diversify your portfolio. These companies ride high on the tailwinds of the pet care industry, which took many analysts by surprise. For instance, the market for pet insurance has doubled over the past four years, which gave insurers an untapped market to write policies.
Similarly, the pet stocks discussed in this article are exploring their avenues for growth. Both capitalize on people’s increased willingness to invest in the wellness of their pets, facilitated via technology.
So read on if you would like to add some pet stocks to your portfolio. Here are three to consider.
Chewy (CHWY)
Chewy (NYSE:CHWY) is an online retailer of pet food and other pet products. The company also offers some cutting-edge items, like monitoring and assistance tools for dogs and cats and automatic pet feeders to save owners time.
Now might be a great time to invest in CHWY stock. Its top and bottom lines experienced substantial growth. Chewy reported net sales of $2.74 billion, marking an 8.2% increase year-over-year. Meanwhile, the brand’s adjusted EBITDA was $82.1 million, up $11.7 million from the previous year.
However, there is a downside to CHWY’s results. It had a net loss of $35.8 million. The losses include share-based compensation as well as the effect of taxes on its bottom line.
In Wall Street’s financial models, these once-off expenses are rarely used as part of long-term valuation models. CHWY’s underlying fundamentals are also robust. That suggests investors may take its adjusted EBITDA as a more accurate indication of the brand’s financial health and consider investing due to its strength.
PetMed Express (PETS)
PetMed Express (NASDAQ:PETS) is an online pharmacy for pets. It’s also tapping into the MedTech segment for future gains. Telemedicine has become a popular trend in healthcare, and there’s a parallel trend for pets.
Specifically, the company is exploring trends where pet owners can book virtual consultations with veterinarians instead of forking out costly in-person visits.
With this tailwind in mind, Wall Street is bullish on the company’s trajectory in the short term. It currently has an analyst consensus Buy rating and an average price target of $13.25. If analyst expectations are correct, PETS could have a 74.11% upside at the time of writing.
So, if one is bullish about telemedicine, investors should also scoop up shares of PETs because it is potentially undervalued.
Zoetis (ZTS)
Zoetis (NYSE:ZTS) is a global animal health company that provides medicines, vaccines and diagnostic products. The company invests in technologies to help improve the health of people’s pets worldwide.
In the third quarter of 2023, ZTS stock reported strong financial results, with a 7% year-over-year increase in revenue to $2.2 billion and a 13% increase in net income to $596 million. Adjusted net income was $629 million, showing a 12% rise on a reported basis. It also updated its full-year 2023 revenue guidance to $8.475 – $8.550 billion.
Like other companies on this list, ZTS has bullish favor on Wall Street. Analysts rate this stock as a Strong Buy since its valuation is expected to improve. Analysts predict that ZTS’s share could rise by 22.53% over the next 12 months, supported by an EPS growth of 11.49% for the same period.
With these results, investors should consider adding ZTS shares to their portfolios.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
