We recently compiled a list of the 10 Best Pet Stocks To Invest In According to Analysts. In this article, we are going to take a look at where Freshpet Inc. (NASDAQ:FRPT) stands against the other pet stocks.
Pet Industry at a Glance
The pet industry is a rapidly growing sector. It was valued at approximately $320 billion in 2023 and is projected to reach nearly $500 billion by 2030, according to Bloomberg Intelligence’s Pet Economy Report. This growth is driven by a rising global pet population and an increasing trend of pet humanization, where owners treat pets as family members and are willing to spend more on their care, including premium food and health services.
The report notes that the US is positioned to remain the largest pet market. In the United States, the market is expected to approach $200 billion by 2030, with significant spending on veterinary care and pet healthcare products.
Ann-Hunter Van Kirk, Bloomberg Intelligence Senior Biopharmaceutical Analyst and co-author of the report, noted that improved pet nutrition is contributing to longer lifespans for pets, which in turn drives up spending on healthcare for aging animals. Analysts expect this trend of increased spending on pet health to continue over the next decade.
Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report, highlighted a notable rise in consumer spending on pet products, predicting that the pet food market could grow by more than 50% by 2030.
Shopping Trends Among Pet Owners
In April 2024, Acosta Group released the results of a new study highlighting important insights into pet parents’ shopping habits. With two in three US households owning at least one dog or cat, spending on pet food, treats, and healthcare has become a significant part of household budgets. The study found that 96% of pet parents consider their pets family members, and 86% are willing to adjust their budgets to accommodate their pets’ needs. This presents a valuable opportunity for retailers and brands to target this large audience.
The study also highlighted key preferences among pet parents regarding food choices. 42% prioritize high-protein content for their pets, followed closely by 40% who focus on joint care and 38% who seek probiotics for gut health. Additionally, 36% of pet parents are interested in fresh, minimally processed foods. Brand loyalty plays a significant role in purchasing decisions, with 57% of dog owners and 59% of cat owners sticking to brands they have previously purchased. However, impulse buying is common, especially among millennials, with 58% influenced by in-store promotions. Most pet owners are turning to mass retailers, pet specialty stores, and online retailers for their pet care purchases, indicating a shift in how pet care products are accessed.
Overall, the pet industry remains a vital part of the global economy, driven by strong consumer attachment to pets and an ongoing commitment to their well-being.
Our Methodology
To compile our list of the 10 best pet stocks to invest in according to analysts, we reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 pet stocks, we focused on the top pet stocks that analysts believe have the most potential for growth. We ranked the 10 best pet stocks to buy based on their average price target upside potential according to analysts as of October 29, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up shot of a store shelf stocked with pet food and supplies.
Freshpet Inc. (NASDAQ:FRPT)
Average Price Target Upside Potential According to Analysts: 17.09%
Number of Hedge Fund Holders: 39
Freshpet Inc. (NASDAQ:FRPT) is an American pet food company that ranks among the best pet stocks to buy according to analysts. The company specializes in fresh, refrigerated meals for dogs and cats. Freshpet Inc. (NASDAQ:FRPT) has carved out a niche by using high-quality, natural ingredients. Their unique approach involves cooking food in small batches at lower temperatures to maintain nutritional value, which resonates well with health-conscious pet owners. The company’s pet food products are available in select grocery, mass, digital, pet specialty, and club retailers across the US, Canada, and Europe.
The company’s recent financial performance has been impressive. In the second quarter of 2024, Freshpet Inc. (NASDAQ:FRPT) reported net sales of $235.3 million, marking a significant 28.3% increase from the previous year. This growth was primarily driven by increased sales volume, demonstrating strong demand for their products. This marked the company’s 24th consecutive quarter of net sales growth of over 25%.
Freshpet’s (NASDAQ:FRPT) strategic focus on expanding its retail presence has also contributed to its success. In the second quarter of 2024, the company had placed 790 new refrigerators in stores, bringing the total to 35,602 fridges across 27,497 locations as of June 30, 2024.
Investors may find Freshpet Inc. (NASDAQ:FRPT) appealing due to its consistent growth trajectory and innovative product offerings. With plans for further expansion and a commitment to quality, Freshpet Inc. (NASDAQ:FRPT) is well-positioned to capitalize on the growing trend of premium pet food consumption.
Over the past 10 years, the company has managed to grow its revenue at a compound annual growth rate of 28%.
Analysts are also bullish on FRPT with a consensus buy rating. The 12-month median price target of $157.00 set by analysts indicates a potential upside of 17% from the current stock price.
According to Insider Monkey’s database, Freshpet Inc. (NASDAQ:FRPT) has also gained significant interest from institutional investors, with the number of hedge fund holders increasing to 39 in Q2 2024, up from 34 in the previous quarter.
Overall, FRPT ranks 10th on our list of the best pet stocks to invest in according to analysts. While we acknowledge the potential of FRPT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FRPT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.