In 2011, Americans spent more on pets than they did on alcohol, and spent more on pet food alone than they did on bread and cereal.
Back in March, I mentioned five reasons to love PetSmart’s stock despite its (at the time) recent underperformance. A few of them: its niche, recession-proof nature and strong growth prospects.
The stock continued to lag for the next month or so after I wrote the article, but since early April, PETM has more than doubled the broader market with a 20% climb. Also, PetSmart reports quarterly numbers Wednesday and is expected to report earnings growth of 21% for the most recent period — not too shabby.
I wouldn’t be concerned with competition from generalists like Walmart (WMT), Safeway (SWY) and Amazon (AMZN), or even PetFoodDirect.com. PetSmart also has training classes and boarding services, while rivals lack the scope on the sales end … and don’t allow you to bring Buster along for a field trip.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.