Are Your Stocks Going to the Dogs? Maybe They Should Be
Marie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If you’re like me and millions of other Americans, you spend a significant amount of time and money on your pets. In my case, it’s three dogs, but all kinds of pets are popular in the United States and many people dote on their pets as one of the family. The ASPCA estimates that 62% of American households have a pet. That translates to about 78.2 million dogs and 86.4 million cats. That’s a lot of kibble, and it doesn’t even account for guinea pigs, snakes, birds and other creatures. So where should animal lovers be investing their cash these days? I like the looks of these three companies: Petsmart (NASDAQ: PETM), IDEXX Laboratories, Inc. (NASDAQ: IDXX), and MWI Veterinary Supply (NASDAQ: MWIV).
Founded in 1986, Petsmart opened its first two stores in Arizona in 1987 as Petfood Warehouse. Since then it’s expanded from the United States to Canada and Puerto Rico with 1,160 stores. To expand their appeal to consumers, many Petsmarts include PetsHotels and Doggie Day Camps, as well as a Banfield Pet Hospital. Why does Petsmart work as a brick and mortar store in the era of online shopping? Because along with the services listed above, they offer community adoption events, partnering with local animal shelters and rescue groups. Leashed dogs are welcome at their stores and weekends at Petsmart are a popular destination for dog lovers across the nation. With a market cap of $6.78 billion and steadily rising stock prices for the last decade, Petsmart is a better bet than its 9.20% operating margin might imply.
Founded in 1985, IDEXX offers diagnostics tools and technologies for small animal health, equine health, and livestock diagnostics, along with dairy and water testing. This is a company with over 25 years of experience and a steady overall rise in stock prices since 2001. Many people like to invest in companies that they deal with every day, but local veterinarians aren't likely to be publicly traded. Investing in companies like IDEXX allows investors to put money in a company that is supplying veterinarians. With solid business experience, a market cap of $5 billion, and a strong operating margin of 20.3%, IDEXX is a good choice for animal lovers looking to invest.
Like IDEXX, MWI Veterinary supply sells to veterinarians rather than direct to consumers. Started in 1976 by a veterinarian, MWI offers diagnostic supplies, veterinary medical equipment and prescription diets. They can fill orders for Schedule II and II N drug orders for licensed buyers, which makes them a nice one-stop shopping experience for a lot of veterinarians. With a market cap of $1.59 billion, MWI is the smallest of the companies I suggest you consider, but with over 30 years of experience and a steady overall rise in stock prices since 2009, MWI is a company to watch. With an operating margin of just 4.1%, though, MWI is the least attractive of the three companies I listed, but it’s still worth watching.
In short, even in tough economic times, Americans spend a lot of money on their pets, so pet friendly stocks are worth a look when you’re expanding your portfolio.
Postjade has no position in any stocks mentioned. The Motley Fool recommends PetSmart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!