Bet on Pets With WOOF Stock

Many investors may not have heard of VCA (WOOF), a company with a non-descriptive name and a market cap of just under $5 billion. But the ticker symbol — WOOF — gives a bit more of a clue as to what VCA does.

VCAantech185The company lets you invest in animal healthcare, providing veterinary services and diagnostic testing to support veterinary care and also selling diagnostic imaging equipment and other medical technology products and related services to the vet market.

Because of that, WOOF should definitely be on your radar

Historically, vets were mom-and-pop plays, so investors couldn’t really get a hand in them. A pick like VCA changes things, though — and that’s promising considering trends in animal healthcare spending. Spending in the pet industry itself is marching upwards, going from under $56 billion in 2013 to over $58 billion last year, with this year’s total slated to come to more than $60 billion.

Vet care specifically is set to make up just under $16 billion of those expenditures this year — good for a steady 5% year-over-year improvement.

It’s no wonder, then, that WOOF stock is up 56% over the past 12 months and up 14% so far this year even as the S&P 500 has been moving sideways. Heck, in the last month alone VCA has booked a 8% gain as the broader market sank more than 1%.

WOOF Stock Has Plenty of Bite

Investors have been flocking to VCA thanks to the company’s strong fundamentals.

For starters, the company has met expectations precisely in the last two quarters and beat the consensus the two quarters prior. Plus, it looks like VCA is just getting started on that front. It’s slated for 14% earnings growth per year over the next half-decade — more than double the 7% annualized growth of the last five years and the 7% growth slated for the broader S&P 500 going forward.

Looking beyond earnings, the company also boasts a return on equity of 11% and an operating margin of 14% — both solid rates.

WOOF stock also has a lot of fans in the analyst community. Just consider the fact that the analyst community’s median price target of $60 leaves room for 11% more upside. That level of upside is especially impressive considering the stock’s recent 12-month run and the fact that analyst targets generally take some time to catch up when there’s such head-turning outperformance.

Looking forward, VCA is slated to report its most recent earnings results late this month, with 10% sales growth and 18% earnings growth on tap for the current quarter (the same growth rates for each that are on tap for the full year). You can tune into the earnings webcast here on July 29 to see where things stand with WOOF — but based on recent performance, there’s a good chance investors will be cheering at the end of this month as well.

Hilary Kramer is the editor of GameChangers and Breakout Stocks Under $10.

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