Better Buy: Pfizer Inc. (PFE) or Zoetis Inc (ZTS)?

Growth
Livestock medicines are expected to grow at a 6% clip from 2011 to 2016 and companion animal products are expected to grow 5% over that time frame, according to Vetnosis, a research and consulting firm specializing in global animal health and veterinary medicine.

I think Pfizer should be able to grow faster than that post-Plavix, but a lot depends on how health-care reform plays out.

Own both?
That’s not such a bad idea.

I’m intrigued by the animal health business. It has a lot of advantages over its human counterpart, although the increased stability likely comes with a lower potential for explosive growth. Pfizer and Zoetis can serve different purposes in your portfolio.

Technically, you can own a part of both by purchasing shares of Pfizer; the pharma giant still owns 83% of Zoetis. But Zoetis’ contribution is a minor portion of Pfizer’s overall business. The growth and stability at Zoetis will hardly affect Pfizer’s earnings needle. If you want to take advantage of Zoetis’ potential, you’ll have to buy shares of Zoetis in addition to Pfizer’s.

Pfizer’s investors might be able to get them directly from Pfizer. I think it’s likely we’ll see Pfizer follow the same path as Bristol Myers Squibb Co. (NYSE:BMY), which did an IPO with its baby formula business, Mead Johnson Nutrition CO (NYSE:MJN) and then allowed investors to trade some or all of their shares of Bristol for share of Mead Johnson at a slight discount. Shares of both companies have beaten the S&P500 since the trade was announced.

The article Better Buy: Pfizer or Zoetis? originally appeared on Fool.comand is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned, and neither does The Motley Fool.

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