In this article, we will take a look at the 12 best pet stocks to buy now. To skip our analysis of the recent market trends and activity, you can go directly to see the 5 Best Pet Stocks to Buy Now.
The pet industry includes companies engaged in the provision of products and services related to pets and range from pet foods and treats to supplies, medicine, veterinary care, and boarding, grooming, insurance, training, pet sitting and walking and all services outside of veterinary care. According to the 2023-2024 APPA National Pet Owners Survey, 66% of the U.S. households, equivalent to 86.9 million households, own a pet, with cats and dogs being the most favored choice by a significant margin.
According to the American Pet Products Association research, total expenditures in the U.S. pet industry amounted to nearly $136.8 billion in 2022 and are expected to increase by 5% year-on-year to $143.6 billion in 2023. The market is dominated by spending on pet food, medicine and other health products, and veterinary care.
The global pet industry is on a growth trajectory and is expected to grow from $320 billion to nearly $500 billion by 2030, according to a report by Bloomberg Intelligence. The United States pet industry is expected to maintain its leadership position in the global industry with sales reaching nearly $200 billion by the end of the decade. Similar to other industries there is a trend to increase the role of technology in the overall industry. E-commerce platforms related to pet supplies are gaining traction especially among the younger generation. In addition, customers are also becoming more conscious of the healthiness and sustainability of pet products. Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report said:
“We’re seeing a profound increase in consumer spending on pets and expect to see this continue through 2030. Consumers are willing to pay more for items for their pets, with the pet food market having the potential to grow more than 50% from current levels by the end of the decade.”
ProShares Pet Care ETF, an ETF that tracks FactSet Pet Care Index which consists of U.S. and international companies that stand to benefit from interest in, and resources spent on, pet ownership. The ETF, which had net assets of $79.45 million, has returned 1.58% during the last twelve months period.
Our list includes leading companies such as Zoetis Inc. (NYSE:ZTS), IDEXX Laboratories, Inc. (NASDAQ:IDXX), and Trupanion, Inc. (NYSE:TRUP), among others.
Methodology
To compile our list of the best pet stocks to buy now, we first made a list of pet stocks with positive analyst ratings and positive upside potential. Only those companies were considered for our list that generate a significant portion of their revenues from the provision of pet related products and services. Then, the number of hedge funds that had bought their shares as of September 2023 was determined through Insider Monkey’s database of 910 hedge funds. Out of these, the stocks with the most hedge fund investors were selected. The stocks on our list have been ranked in an ascending order of hedge fund ownership.
12. PetIQ, Inc. (NASDAQ:PETQ)
Number of Hedge Fund Holders: 18
Eagle, Idaho-based PetIQ, Inc. (NASDAQ:PETQ) is a leading pet medication and wellness company providing convenient access to affordable veterinary products and services. It engages with customers through more than 60,000 points of distribution across retail and e-commerce channels with its branded distributed medications. VIP Petcare, the national service platform of the company, operates in over 2,600 retail partner locations in 41 states.
On November 7, PetIQ, Inc. (NASDAQ:PETQ) released its financial results for Q3 2023. Its total revenue increased by 32% y-o-y to $277 million, while it reported a net income of $0.5 million compared to a net loss of $50 million. It generated a normalized EPS of $0.42 for the quarter, $0.40 more than the consensus estimates.
On October 2, Truist Securities analyst Bill Chappell raised the price target for PetIQ, Inc. (NASDAQ:PETQ) shares to $30 from $25 and maintained a ‘Buy’ rating. The price target represents a potential upside of 68.63% based on the share price on November 28.
As of Q3 2023, 18 of the 910 hedge funds tracked by Insider Monkey held PetIQ, Inc. (NASDAQ:PETQ) shares valued at a combined total of $53 million. Marshall Wace LLP held the highest number of shares among hedge funds, with ownership of 0.5 million shares valued at $10.4 million.
11. Trupanion, Inc. (NYSE:TRUP)
Number of Hedge Fund Holders: 18
Seattle, Washington-based Trupanion, Inc. (NYSE:TRUP) is a pet medical insurance company that provides medical plans for cats and dogs in the United States, Canada, and Puerto Rico. It boasts more than 1.7 million total enrolled pets, as of September 30, 2023.
On November 2, Trupanion, Inc. (NYSE:TRUP) released its financial statements for Q3 2023. Its total revenue increased by 22% y-o-y to $286 million, while it reported a net loss of $4 million compared to a net loss of $13 million. It generated a normalized EPS of $0.06 for the quarter which surpassed consensus estimates by $0.17.
Trupanion, Inc. (NYSE:TRUP) held $265.9 million in cash and short-term investments at the end of Q3 2023. Its long-term debt stood at $128 million at the end of the period.
Like other stocks such as IDEXX Laboratories, Inc. (NASDAQ:IDXX), Elanco Animal Health Incorporated (NYSE:ELAN), and Zoetis Inc. (NYSE:ZTS), the shares of Trupanion, Inc. (NYSE:TRUP) are among the best pet stocks to buy now.
10. Neogen Corporation (NASDAQ:NEOG)
Number of Hedge Fund Holders: 18
Lansing, Michigan-based Neogen Corporation (NASDAQ:NEOG) develops and markets products dedicated to food and animal safety. Its products include dehydrated culture media, diagnostic test kits, diagnostics, veterinary instruments, veterinary pharmaceuticals, nutritional supplements, disinfectants, and rodenticides.
On September 1, 2022, Neogen Corporation (NASDAQ:NEOG) announced the completion of its merger with the food safety business of 3M Company (NYSE:MMM). As part of the transaction, existing Neogen Corporation (NASDAQ:NEOG) shareholders retained 49.9% of the combined company with the remaining 50.1% owned by 3M shareholders. 3M also received consideration valued at $1.0 billion.
In its Q2 2023 Baron Growth Fund investor letter, Baron Funds, an investment management company, made the following comments about Neogen Corporation (NASDAQ:NEOG):
“We expect Neogen to compound its revenue at a high single-digit rate organically. The company serves an addressable market that exceeds $20 billion of annual recurring revenue, or more than 20 times larger than its business. The food security market is growing at a mid-single rate annually, driven by durable secular trends including more incidents of food contamination, rising incomes in emerging markets, more health-conscious consumers, increasing food allergies, and an increasing focus from regulators. Beyond organic growth, the company has a muti-decade long track record of making successful bolt-on acquisitions, which we expect will continue.”
9. Petco Health and Wellness Company, Inc. (NASDAQ:WOOF)
Number of Hedge Fund Holders: 22
Founded in 1965 and based in San Diego, California, Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) is a pet health and wellness company. It operates more than 1,500 pet care centers across the U.S., Mexico, and Puerto Rico, and offers merchandise, companion animals, grooming, training and on-site veterinary hospitals and mobile veterinary clinics.
On August 24, Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) announced its financial results for three months ended July 29, 2023. Its revenue increased by 3% y-o-y to $1.5 billion while it recorded a net loss of $14.6 million, compared to a net income of $13.5 million. The normalized EPS and revenue were nearly in-line with consensus estimates.
As of Q3 2023, Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) shares were held by 22 hedge funds with the total shares held by them valued at $53 million.
Like other stocks such as IDEXX Laboratories, Inc. (NASDAQ:IDXX), Elanco Animal Health Incorporated (NYSE:ELAN), and Zoetis Inc. (NYSE:ZTS), the shares of Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) are among the best pet stocks to buy now.
8. Freshpet, Inc. (NASDAQ:FRPT)
Number of Hedge Fund Holders: 23
Secaucus, New Jersey-based Freshpet, Inc. (NASDAQ:FRPT) makes fresh and all natural refrigerated dog and cat food in the U.S., and is the fastest growing pet food brand, with refrigerators in over 22,000 stores.
Freshpet, Inc. (NASDAQ:FRPT) got embroiled in a proxy fight with Jana Partners, an activist investor and largest shareholder of the pet food maker with a 9.5% stake, in May. Jana Partners was pushing for appointment of new Directors to the company’s Board of Directors as it believed that there were operational inefficiencies and corporate governance issues.
After a public back and forth, the matter ended on August 21 with the signing of a cooperation agreement between the two parties that included the appointment of two directors Timothy McLevish, former Kraft Foods CFO, and Joseph E. Scalzo, former Simply Good Foods CEO, to the Board of Directors of Freshpet, Inc. (NASDAQ:FRPT).
As of Q3 2023, Freshpet, Inc. (NASDAQ:FRPT) shares were held by 23 hedge funds with the total shares held by these funds valued at $492 million.
7. Patterson Companies, Inc. (NASDAQ:PDCO)
Number of Hedge Fund Holders: 24
Based in Saint Paul, Minnesota, Patterson Companies, Inc. (NASDAQ:PDCO) is a value-added specialty distributor serving the U.S. and Canadian dental supply markets and the U.S., Canadian and U.K. animal health supply markets. It supplies products and services including biologicals, pharmaceuticals, parasiticides, supplies, including our own private label brands, and equipment, among others.
On January 9, Patterson Companies, Inc. (NASDAQ:PDCO) announced completion of the acquisition of Relief Services for Veterinary Practitioners and Animal Care Technologies. It provides innovative solutions to veterinary practices through data extraction and conversion, staffing and video-based training services. Previously, the company had acquired Dairy Tech, Inc., in December last year.
Patterson Companies, Inc. (NASDAQ:PDCO) has paid regular quarterly dividends for more than a decade. On September 12, the Board of Directors of the company declared a quarterly dividend of $0.26, which represents a dividend yield of 3.39% based on the share price on November 28.
As of Q3 2023, Patterson Companies, Inc. (NASDAQ:PDCO) shares were held by 24 out of 910 hedge funds tracked by Insider Monkey with a total value of $163 million. Its largest shareholder was Israel Englander’s Millennium Management with ownership of 1.7 million shares valued at $49 million.
6. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 28
Chewy, Inc. (NYSE:CHWY), based in Plantation, Florida, is an online retailer of pet food and other pet-related products. It partners with nearly 3,500 brands in the pet industry to bring 110,000 products and services offerings to its customers.
On August 30, Chewy, Inc. (NYSE:CHWY) released its financial results for Q2 2023. Its revenues increased by 14% y-o-y to $2.8 billion, while it reported a net income of $19 million translating into a normalized EPS of $0.15, $0.06 above the consensus.
On October 31, Wedbush analyst Seth Basham reiterated an ‘Outperform’ rating for Chewy, Inc. (NYSE:CHWY) shares with an unchanged price target of $31. The price target represents a potential upside of 65.60%, one of the highest on our list of 12 best pet stocks to buy now.
As of Q3 2023, 28 of the 910 hedge funds tracked by Insider Monkey owned shares of Chewy, Inc. (NYSE:CHWY), valued at $207 million. Steve Cohen’s Point72 Asset Management was the largest shareholder with ownership of $60 million worth of shares, followed closely by Jim Simons’ Renaissance Technologies with $56 million worth of shares.
Click to continue reading and see 5 Best Pet Stocks to Buy Now.
Suggested Articles:
12 Most Important Financial Ratios to Analyze a Company
16 Best Pickleball Paddles Under $50
20 Best Places to Retire in The World for U.S. Citizens
Disclosure: None. 12 Best Pet Stocks to Buy Now is originally published on Insider Monkey.