Central Garden & Pet (CENT), PetMed Express (PET) and More Ways to Make Money from Fido
Of all the important legislation that Congress is debating, my eye caught one piece I hadn't noticed, HR 3501. If passed, this bill would allow Americans a deduction of up to $3,500 a year for... pet care expenses.
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No, I’m not making this up. The bill even has one of those silly names, "Humanity and Pets Partnered Through the Years." Get it? It’s the HAPPY bill.
When it comes to Americans and their pets, that’s where the money is. According to the American Pet Products Association, Americans will spend $45 billion on their pets this year. That’s up from $43 billion in 2008. Fido is clearly big business. In fact, I don’t see why it needs help from Uncle Sam outside of the fact that everybody else is getting a bailout, so why not the family pooch?
Will the bill become law? I don’t know, but if it did, it probably won’t happen anytime soon. Still, this is a good time for us to focus on pet stocks. This is sector that won’t be going out of business.
Central Garden & Pet and PetMed Express Are Buys
Two pet-oriented stocks I like right now are Central Garden & Pet (CENT) and PetMed Express (PETS).
CENT is having a great year so far. The stock got down to as low as $2.17 a share, so it’s gained over 400% from its 52-week low. As the name suggest, the company makes many garden products. Their other division makes everything your car or dog could love, from edible bones and chew toys to collars and carriers. When you consider all that CENT makes, you see where that $45 billion a year goes.
Central Garden has been on a tear this year. The company's last two earnings reports beat the Street by over 50%. The next earnings report should be out soon. Wall Street is looking for 12 cents a share, which is twice what CENT earned a year ago. So the expectation is for 100% growth, and there’s a good shot CENT might exceed that.
Shares of PetMed Express are down since the company released its earnings report on Monday, October 19. Truth be told, the earnings report wasn’t that bad. PETS earned 28 cents a share, which was a nice increase over the 25 cents the company earned a year ago. That’s especially good in this environment.
However, what spooked traders was that that PETS sales figured rose 5% to $62.4 million. The Street was expecting a 10% increase in sales. I’m not terribly concerned about that yet. A 5% increase in sales is good, especially when inflation and economic growth are flat. Both Central Garden & Pet and PetMed Express are good buys.
Three more stocks I like, but currently have on Hold, are VCA Antech (WOOF), IDEXX Laboratories (IDXX) and Petsmart (PETM). (I should add that VCA Antech has my favorite ticker symbol on Wall Street.)
Don’t be fooled by Petsmart’s recent earnings news and higher guidance. It’s good, but the company needs to show more to be a buy again. IDXX has had a very good run, but I think the stock is a bit high here. It may have to fall to be a buy again.
Finally, two pet stocks I don’t like are Animal Health International (AHII) and Patterson Companies (PDCO). These two are truly for the dogs.
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