One Pet Stock to Buy in the Booming Pet Industry

KEY POINTS

• The new number of jobless claims was up slightly, holding back the market.
• The pet care industry is booming and presents an exciting investment opportunity.
• A pet care stock screener on Stock Card reveals a hidden gem stock, HSKA.

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OVERALL MARKET

The new number of jobless claims was up slightly, holding back the market.

The market indices ended the day in the red.

After quite a few days of steady upward movement, the indices pulled back as investors digested some new economic info. 

First up, the new jobless claims report came out and showed the claims were up slightly from last week, by about 4,000 cases. This didn’t entirely cause for alarm but certainly missed expectations. 

Also, the U.S. Bureau of Economic Analysis released the economic growth numbers today, coming in at 6.6%, which is barely above last month’s 6.5%. It’s a good sign to see that the growth stabilized despite consumer’s uncertainty.

Overall, there was enough negativity in the market to hold the market indices back from inching upward.

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WHAT'S UP?

The pet care industry is booming and presents an exciting investment opportunity.

As an investor, my style is to invest in companies that play a significant role in my life. I believe our portfolios are the financial reflection of who we are. And as a dog mom, I'm always interested in pet-related stocks. My husband and I spoil our dog Kratos so much, and I don't believe we are the only ones. Just hear these numbers I found on Petpedia.com:

• 61% of US pet owners will pay more for foods to target pets’ dietary needs.
• Dog owners spend $73 a year on grooming.
• Cat and dog owners spend about $300 a year on pet food and treat.
• Over 50% of cat and dog owners give their pets a Christmas gift or treat.
• 69% of Millennials opt for their pets’ natural and organic products.
• 43% of dog owners and 41% of cat owners buy premium pet food.

I 100% believe all these numbers. According to the American Pet Product Association, 2020 was the first year the pet products industry generated over $100 billion in revenue. I can also see the evidence of this booming industry on Stock Card. For example, on Chewy's (CHWY) Stock Card, I noticed the pet eCommerce industry is expected to grow by more than 11%. This convinced my team and me to launch a new list of stocks on Stock Card. 

Say hello to the Pet Stocks collection. This is a list of 48 stocks that are somehow involved in servicing our furry babies. The companies range from retailers to insurance carriers. There’s a wide range of niches within the blanket term of pet care, so there are even more specific collections. Search “pet” on Stock Card, and you can see the sub-segments of the pet care industry:

• pet eCommerce
• pet food and drinks
• pet healthcare
• pet insurance 

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PET STOCKS SCREENER

A pet care stock screener on Stock Card reveals a hidden gem stock, HSKA.

Now, not every pet stock is worth owning, even though the industry is growing double-digit rapidly. I started a new Screener on Stock Card's Screener tool to figure out pet stocks worth buying. I added the "Pet Care" collection in the Screener's search bar and picked a few specific filters:

• Good sales growth
• High growth potential
• No cash concerns

The result was a short but sweet list of 4 pet care stocks worth considering. You can click here to get the list of Strong Pet Care stocks.

Two familiar names caught my eye first. Both Progressive (PGR) and Independence Holding (IHC) are significant players in the insurance game and have extended their services to pet owners.

The one stock in particular that interested me was Heska Corp (HSKA). I've never heard of it before. This is a pet pharmaceutical company that sells veterinary products. Its operations are split into two main divisions. With the first division, the company provides animal healthcare products to consumers. This is the front face of the business and what the brand markets itself as. The second division deals with vaccines and other animal pharmaceuticals in the agriculture industry, such as cattle medicine.

Heska’s Stock Card is looking great! It has solid green ratings for industry and sales growth alike, not to mention a positive free cash flow. The company isn’t quite profitable now, but having a positive free cash flow indicates that management is reinvesting profits back into the business. However, the industry has found a way to make its core operations run profitably. This stock has treated investors well too, just take a look at the Past Investment Return! You would have been rewarded for banking on Heska instead of the S&P 500 for the past ten years.

According to Heska's CEO, during the earnings report earlier this month, the company will continue growing steadily, raising the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin by more than 10% for the rest of the year. It’s balanced and well-managed, with a bright outlook. If you want to invest in the growing pet care sector while avoiding some of the weaker businesses, this is an outstanding stock to add to your list.

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