There’s no denying that the pet industry is booming. According to the American Pet Products Association, total pet industry expenditures were $123.6 billion in 2021, the most recent year for which data is available. This represented a nearly 20% jump from $103.6 billion in 2020. If you’re a pet owner or simply an investor looking for an industry that’s growing by leaps and bounds, an investment in pet stocks could pay dividends. The trick is to pick the long-term winners.
7 Best Pet Stocks To Buy
While some broad-based consumer products companies have their own pet divisions, other companies exclusively focus on pets. When looking at these pure plays in the pet industry, be sure to have a conversation with your financial advisor about your personal investment objectives and risk tolerance.
1. Trupanion (TRUP)
Trupanion offers something of a unique angle on the pet industry, as its main product is pet insurance. If you’re not familiar with pet insurance, that’s actually a plus for the stock. Only a small percentage of pets in America are covered by pet insurance, but vet bills continue to rise every year. As word spreads that pet insurance is available — and that Trupanion is the industry-leading company to deliver it — business could potentially soar for this under-the-radar stock. Analysts have a consensus “buy” rating on the stock, with an average 12-month price target about 14% above current levels.
2. Chewy (CHWY)
Chewy is among the most well-known pet-oriented companies, selling pet food and pet-related products to U.S.-based customers through a retail website and a mobile app. The company works with over 2,000 brands and has over 9 million square feet of fulfillment warehouses. During the darkest days of the pandemic in 2020, shares skyrocketed 207.53% as Americans were reluctant to — or prevented from — visiting physical retail locations. As brick-and-mortar shops began to open, Chewy shares took a tumble, falling 34.4% in 2021 and 37.12% in 2022. However, analysts maintain a “strong buy” rating on the stock, which has already bounced over 10% in 2023.
3. Bark (BARK)
If you’re looking for a low-priced entrant to pet stocks, Bark might be an option. Shares traded for just $1.99 as of Jan. 10, 2023. Of course, low-dollar stocks often carry considerably larger amounts of risk than their higher-priced brethren — and this has definitely been the case with Bark. Shares of the dog-focused company, which offers subscription products ranging from toys to food, fell over 71% in 2020 and followed that up with a 65% decline in 2021. However, speculators have piled into the stock in early 2023, pushing shares up 33%. Clearly, shares of BARK are not for the faint of heart.
4. Zoetis (ZTS)
Health is becoming a larger and larger portion of the pet industry, and the largest play is Zoetis. Before stumbling 40% in 2022, shares of Zoetis had been on a tear, rising 22% in 2020 and 47% in 2021. The company’s position as the global leader in diagnostics, medicines, vaccines and technologies extends out to over 100 countries. Analysts see big things ahead for the company, with a consensus “strong buy” rating and a 12-month average price target of $208.83, 35% above current levels.
5. Idexx Laboratories (IDXX)
Idexx Laboratories produces diagnostic and software tests and products for the veterinary industry. As pet owners become more and more willing to spend money on the testing and prevention of diseases for their animals, Idexx Laboratories stands to benefit. In addition to his pet-focused business, Idexx Laboratories also provides water testing solutions — that ensure the safety of drinking water for over 2.5 billion people — and livestock, dairy and poultry diagnostic tests. After more than doubling from 2020 to 2022, the stock took a breather in 2022, falling 38%. However, it has already bounced back more than 15% to start 2023.
6. Freshpet (FRPT)
Analysts are bullish on Freshpet, with a consensus “strong buy” rating and a 12-month price target 35% above current levels. Freshpet aims to provide fresh, healthy, natural food for dogs and cats. Their food is made with whole ingredients and no preservatives, meant to be stored in the refrigerator and served fresh. Freshpet sells through both online and brick-and-mortar retail outlets. As with many “stay-at-home” stocks, shares of Freshpet more than doubled during the 2020 pandemic year before falling 33% and 44% in the following two years, respectively. Some investors and analysts alike feel shares are now cheap, pushing them up about 10% YTD in 2023.
7. Petco Health & Wellness (WOOF)
Petco Health & Wellness provides pet grooming and training, veterinary care, and pet nutrition products and supplies. The company operates over 1,500 outlets across the U.S., Puerto Rico and Mexico. In addition to being an online resource for pet health and wellness on its website and mobile app, Petco Health & Wellness also has more than 100 in-store veterinary hospitals. Unfortunately for investors, shares of Petco Health & Wellness have done little but go straight down since the company’s IPO was announced at $18 per share on Jan. 13, 2021. Analysts remain believers, however, with a consensus “strong buy” rating on the stock and a year-out price target of $14.30, signifying the potential for a 38% gain.
The pet industry is definitely growing, but it is fragmented. Ultimately, there are likely to be big winners in the sector, but along the way many others may falter. When looking for pet stocks, consider shares of pure play pet companies to be high-risk, high-reward for the time being.
Here are the answers to some commonly asked questions about pet stocks.
Is the pet industry a good investment?
What pet stores are publicly traded?
Trupanion, Chewy, Bark, Zoetis, Idexx Laboratories, Freshpet and Petco Health & Wellness are all pet stores, whether brick-and-mortar or online exclusive, that are publicly traded.
Is the pet industry booming?
Yes, the pet industry is booming. According to the American Pet Products Association, total pet industry expenditures were $123.6 billion in 2021, the most recent year for which data is available. This represented a nearly 20% jump from $103.6 billion in 2020.
What is the largest pet company?
Data is accurate as of Jan. 11, 2023, and is subject to change.
This article originally appeared on GOBankingRates.com: 7 Best Pet Stocks For Animal Lovers To Buy In 2023