The novel coronavirus pandemic has made it glaringly obvious: we humans have become quite the sorry bunch. From the wave of hate crimes and stigmatization that have rippled across the U.S. to divisive and sometimes violent political actions, we can’t cooperate even when cooperation is mutually beneficial. One thing we can agree on is the sentimental importance of our pets, and thus the economic importance of pet stocks.
Our non-human family members love us unconditionally. They just ask that we take care of their basic needs — nothing more, nothing less, although a treat is always appreciated. With such a strong showing of loyalty, you can understand why Americans spend billions on pet care, bolstering the case for pet stocks to buy.
Though this collective cost might seem irrational to those who don’t have a pet of their own, it actually makes dollars and cents. HelpGuide.org points out pet owners are less likely to suffer from depression. That was relevant before the pandemic. As people lost access to their social networks for long stretches of time, it became crucial.
Pet owners additionally have lower blood pressure, which improves overall health outcomes. On a related note, “playing with a dog or cat can elevate levels of serotonin and dopamine, which calm and relax.” As you know, there’s a lot of stress going around lately. Therefore, investors should consider these pet stocks not only for their profit potential but also because it just seems like the right thing to do.
Here are 7 pet stocks to buy in support of our furry friends:
- Clorox (NYSE:CLX)
- Lemonade (NYSE:LMND)
- Heska (NASDAQ:HSKA)
- Chewy (NYSE:CHWY)
- Central Garden & Pet (NASDAQ:CENT)
- Covetrus (NASDAQ:CVET)
- Pets at Home Group (OTCMKTS:PAHGF)
Several pet stocks have red ink on the charts due to fluctuating circumstances regarding Covid-19, the economy and other pressing factors. If you’re a conservative investor, you may want to wait a bit for these names to stabilize before moving in.
According to YPulse.com, “Millennials are a generation of pet parents.” In its survey, the company found that “76% of 20 — 38-year-olds have a pet, with over half reporting they have dogs and 35% owning cats.”
As for me, I’m a dog person — I find them much easier to deal with than cats. Our feline friends can give off some of the worst odors imaginable if you don’t take care to freshen up consistently. But for that, we have Clorox.
Though most often associated with home cleaning solutions, Clorox offers a wide range of pet care products. In my opinion, its stain and odor removers can’t be beat. Even if you’re a cat lover, Clorox will keep your sanity intact, which comes at a premium during these strange times. That right there makes CLX stock worth a look.
Another reason to include shares in your list of pet stocks to consider is the company’s core business. While I don’t want to be the bearer of bad news, novel coronavirus cases are rising in Florida (no surprise there). Hopefully, this doesn’t mean anything. But if we see a wider resurgence, you can expect another spike in demand for CLX stock.
If millennials are the generation of pet owners, they’re also leading in another category: residential leases. According to information by CICreports.com, 50% of the 2018 rental market comprised of millennials, while Generation Z made up another 15%. On the flipside, Gen X and baby boomers combined for 31%.
Why am I mentioned these rental statistics on a story about pet stocks? Publicly traded companies like Lemonade can offer indirect exposure to the pet care market.
As an insurance app, Lemonade naturally caters to young consumers. Moreover, through its platform, users can access low-cost pet health insurance for their furry friends. When you combine that ease of access and low entry price with millennials’ love for animals, LMND stock is a great pet stock to buy.
Moving forward, I don’t anticipate too many young people from making a massive dent in real estate ownership. With the economy apparently headed toward deflation, the rental market could continue to be robust. You’ll want to keep close tabs on LMND stock, especially given its recent discount.
While 2020 was an awful year for everyone, certain sectors enjoyed remarkable upside. Pet stocks enjoyed a sentiment lift as people were forced to shelter in place and thus spent more quality time with their four-legged friends. Turns out, it wasn’t just time they were spending, but monetary resources as well.
In 2020, veterinary care and product sales accounted for revenue of $31.4 billion, a figure that only continues to move higher. In fact, experts predict by the end of this year, this category could increase nearly 3% to $32.3 billion. Pet owners are sparing no expense, auguring well for veterinary technology services firm Heska and specifically HSKA stock.
Featuring lab diagnostics solutions and a point-of-care digital imaging platform, Heska’s veterinary equipment provides rapid and reliable results, leading to much better decision making for pet parents. Given the hardship of the pandemic — particularly the loss of or disruption to social networks — people are more incentivized to spend on their pets. HSKA stock is another name to watch closely.
An online retailer of pet food and supplies, it should come as no shock that Chewy was one of the pandemic’s biggest winners among pet stocks. On the human front, e-commerce as a percentage of total retail sales hit a record high of 16.1% in the second quarter of 2020. While this metric has come down some recently (14% in Q4 2020), it’s still elevated relative to pre-pandemic norms.
The shift to contactless purchases represented a massive tailwind for CHWY stock, gaining 206% in 2020. But to be fair, with coronavirus cases declining sharply from their early January 2021 peak, Chewy shares have taken a hit. Therefore, prospective buyers may want to wait things out a bit before taking a shot at CHWY stock.
Once the volatility dies down, you may want to consider rolling back into CHWY stock on the discount. I say this primarily because once a habit has been established, it’s difficult to break. Basically, we’ve had a year of enjoying convenient online services, which means some customers will likely continue going contactless.
Additionally, any future Covid-19 resurgence could mean game back on for Chewy.
Central Garden & Pet (CENT)
Another diversified pet stock, Central Garden & Pet addresses two relevant circumstances that came about because of the pandemic. First, this company offers a variety of pet food and care products. With everyone at home, it’s vital to keep everything tidy. And for those who own small or exotic pets, Central Garden & Pet offers a robust library of care and management solutions.
Second, because everyone is at home all day, combined with limited outdoor/public events to attend, the pandemic has incentivized many folks to consider home improvement projects. This is where the garden in Central Garden comes into play. This is especially relevant for the rich folks who took advantage of our cheap money environment to buy more real estate at lowered borrowing costs.
Still, the main drawback with CENT stock is that most investors recognize the bullish “duality” of the underlying business. Personally, I’m not one to chase shares. If you’re like me, I’d wait until CENT cools off, then reengage.
In human healthcare, software and technology firms are leveraging data analytics and artificial intelligence protocols to lessen administrative loads for medical professionals. It’s one of the biggest reasons e-signature solutions were very popular during the worst of the Covid-19 crisis.
But shouldn’t our furry friends also get some love? I’ve said it before and I’ll say it again now — humans are terrible. And the cost of human health insurance is awfully inhumane, if you want my opinion. For all you pet lovers out there, Covetrus is a company you’ll want to follow closely.
Providing comprehensive services encompassing supply chain, software solutions and prescription management, Covetrus helps ease the burden for veterinary professionals so that they could do the job that’s most important — taking care of your furry family members.
To be upfront, CVET stock has been volatile as of late — a common characteristic of many pet stocks this year. Therefore, conservative investors should consider waiting a bit for that wildness to die down.
Pets at Home Group (PAHGF)
While we often joke about our fellow Americans sometimes taking their love of pets a bit too far, we’re not the only ones who prefer four legs over two. Across the pond in the U.K., the British also mimic our love of pets. Actually, it’s the other way around as they have a long history of pet care and ownership.
Britain was in fact “the first country in the world to start a welfare charity for animals.” And of course, the British gave us Americans some of our most beloved dog breeds, including the golden retriever, beagle and bulldog.
So it shouldn’t be a surprise that you can find some viable pet stocks in that country. If you don’t mind taking some risks, you should consider Pets at Home Group with your speculative funds. Billed as the U.K.’s leading pet care business, Pets at Home should theoretically perform well.
Cynically, European countries have had a heck of time trying to control the coronavirus. The constant lockdown measures mean more incentives for British pet owners to take care of those that really matter.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.