What do you do when you own a Persian cat, a chow chow dog, and several horses?
You end up making frequent trips to the pet store for supplies. Or better yet, you end up going online and buying all sorts of medications, flea control supplies, and other essentials for your furry family members.
Now, I am by no means a unique pet owner, as most Americans who own pets have a tendency to spend big bucks on their four-legged friends. According to The American Pet Products Association, pet product sales went from $43 billion in 2008 to $53 billion in 2012.
Click to Enlarge Lately, the bucks spent on kittens and puppies have been even bigger, and we’ve seen that reflected in the recent quarterly results, and big share price spike, in PetMed Express (PETS).
The operator of 1-800-PET-MEDS saw its shares spike 13% on July 22, after the company reported earnings per share of 24 cents in fiscal Q1, easily beating consensus expectations for EPS of 2 cents. Sales in the initial quarter of fiscal 2014 saw a 7.6% year-over-year rise to $74.2 million, once again much better than estimates for revenue of $69 million. The company also said that gains came on strength in new orders and reorders, as well as an increase in the average order size to $77 from $73 in Q1 last year.
The stellar PetMed quarter shows that pet lovers like me continue to spend big on their animals, and that’s something that isn’t about to change. For traders, this public’s love affair with kittens and puppies means more earnings growth, and even more 13% one-day spikes on good news.
Buy PETS now, and I suspect you’ll be barking all the way to the bank with a 10% to 15% gain by the end of the year.
At the time of publication, Jim Woods held no positions in the stocks mentioned.