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Unleash Your Portfolio: 3 Pet Stocks Poised to Fetch Big Returns

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Two-thirds of American households own at least one pet, and large majorities of these pet owners view their companions as part of their families. Therefore, it’s unsurprising that many households spend large amounts of money on their pets. Indeed, the global pet care market is expected to be worth nearly $370 billion in 2030, versus an estimated total of almost $250 billion in 2023. Pet stocks are likely to be rather resilient to recessions, as a survey suggested that pet owners are very reluctant to reduce the amount they spend on their furry children. Here are three pet stocks that, in light of the strong outlook for the pet economy and their recent, strong performances, should be profitable for investors over the long term.

Freshpet (FRPT)

A view of several packages of FreshPet (FRPT) pet food, on display at a local grocery store.

Source: The Image Party / Shutterstock.com

Pet food provider, Freshpet’s (NASDAQ:FRPT), fourth-quarter financials show that the company is growing rapidly and becoming significantly more profitable.

Specifically, its sales jumped 30% YOY to $215 million, while its bottom line came in at $15.3 million, compared with a loss of $2.9 million in Q4 of 2022.

“The significant investments we have made… have begun to generate improved profitability and significant operating cash flow,” CEO Billy Cyr said in a statement. 

The firm’s balance sheet is strong, as it had $338 million of cash at the end of last year compared with $393 million of debt.

In January, Goldman named FRPT stock as one of the small-cap names that could outperform the stock market going forward. FRPT is a solid option among pet stocks.

PetIQ (PETQ)

a smiling dog on a leash

Source: Shutterstock

A wholesaler of pet medications and wellness products, PetIQ (NASDAQ:PETQ), delivered remarkable Q4 results that shows that the firm’s top and bottom lines are both expanding.

Specifically, PetIQ’s sales jumped 20% versus the same period a year earlier to a record $220 million, while EBITDA climbed 35% year-over-year to $104.7 million. Also importantly, PetIQ generated nearly $62 million of cash from its operations in Q4.

Of the six Wall street analysts who have issued notes on PETQ stock in the last 90 days, five have “Buy” ratings on it.

Trupanion (TRUP)

a veterinarian holding a small white dog

Source: Shutterstock

The pet insurance market is growing rapidly, as the number of insured pets in the U.S. climbed 17% last year.

Pet insurer, Trupanion (NASDAQ:TRUP), appears to be benefiting from this trend as it delivered strong top-and-bottom line growth in Q4.

Specifically, its revenue jumped 20% versus the same period a year earlier to $296 million, while its EBITDA came in at $8.5 million, versus an adjusted EBITDA loss of $2.2 million in Q4 of 2022. Moreover, its operating cash flow increased to $17.5 million from just $1 million in Q4 of 2022.

Also noteworthy is that TRUP insured over 991,000 pets at the end of last year, marking a considerable increase of 14% from the number of pets that it had insured as of the end of 2022.

Impressively, the firm believes that it can increase its operating income by over 30% this year. In 2023, the firm raised its prices more than 20% but was able to retain 98% of its customers.

The price-sales ratio of TRUP stock is a very low and attractive 0.5 times.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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