It’s possible that the global pandemic has taken America’s love affair with our pets to new heights. Pet ownership is up and so are the stocks of many pet stocks. You don’t have to be the kind of person who calls themselves a “dog mom” or a “cat dad” to appreciate the fact that pets become like family members.
Businesses certainly have. And that’s why the pet care industry has exploded. I’m old enough to remember when Pets.com was going to be a thing. As it turns out, it fizzled out as part of the dot-com bubble. However, the idea was right. The company was simply ahead of its time.
Well the times have changed. Pet owners are demanding the same quality of food and medical care that they would provide for human family members. And when you consider the price that many pet owners pay to breeders, you can’t really blame them.
This is making pet stocks one of the hottest sectors in the market. So let’s take a look at three pet stocks that investors should keep their eye on as we move into the second quarter of 2021.
As I mentioned above Pets.com was an idea before its time. That idea has had a very profitable second act with Chewy (NYSE:CHWY). The company is ideally positioned for two of the hottest trends in sales: e-commerce and pet care.
I’d like to focus on the e-commerce aspect of the company’s business. Chewy has managed to carve out a niche that allows them to keep Amazon (NASDAQ:AMZN) in check. That’s not easy to do. And it speaks to the idea that Chewy is enjoying growth from its existing customers and increasing that customer base.
That was certainly the case during the pandemic. In the company’s last earnings report it posted a whopping 51% year-over-year revenue increase.
Should you expect the company to consistently report 51% year-over-year revenue growth (as it did in the last quarter? That’s unlikely. The company is “only” expecting sales growth of around 30% over the next two quarters. That will be just fine for investors and may be the only reason you need to buy CHWY stock.
Freshpet (NASDAQ:FRPT) is a pet food company that specializes in providing fresh, premium pet food under several brand names. The company is carving out a unique niche in a sector that is said to have an addressable market of at least $31.7 billion. Now I’m a sucker for a unique selling proposition (USP) and Freshpet has one.
Its products much be refrigerated. That alone is a differentiator. However, it could be a potential obstacle since most stores would not be set up to accommodate pet food in that manner. No problem. The company has installed over 21,500 of its Freshpet Fridges in stores. It’s looking to expand to at least 30,000 stores in North America. And the company is just starting to look into international expansion.
I’ll admit that FRPT stock looks like it’s priced just about right. In fact, the consensus price target suggests the stock may drop about 10%. But, DA Davidson increased its price target from an already lofty $194 to $217. That provides plenty of food for thought.
Wellness isn’t only about humans. PetIQ (NASDAQ:PETQ) is a pet medication and wellness company. The vertically integrated company sells prescription pet medications, as well as OTC health and wellness products. PETQ stock has nearly doubled in the last year, but is basically flat in 2021.
However, the company has a 12-month price target of $78.75 which is a bump of over 120% from its current level. Plus, despite the pandemic the company generated $780.05 million in revenue in 2020 which was 10% increase over 2019.
And if that’s not enough of a reason to consider PETQ stock, consider that the company offers veterinary services in select retail locations including Walmart (NYSE:WMT) and Target (NYSE:TGT).
Before you consider Chewy, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Chewy wasn't on the list.
While Chewy currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link below and we'll send you MarketBeat's guide to pot stock investing and which pot companies show the most promise. Get This Free Report