It’s no secret that in 2020 many people are watching their finances closely.  However, there are always some things that people spend their money on even during challenging economic environments, like the one we’re currently experiencing.  One of these things is products for their pets.

Pet owners have continued to spend on their furry friends, even as the economy remains on shaky ground.  It’s estimated $99 billion will be spent on pets in the United States in 2020. This figure has increased every year for the past 25 years. 

Why?  Because for many, pets are considered members of their families and therefore pet owners spare no expense.  And the number of adopted pets during the coronavirus-era has actually increased.  

With that in mind, let’s take a look at three pet stocks worth considering: Zoetis (ZTS), IDEXX Laboratories (IDXX) and Freshpet (FRPT).

Zoetis (ZTS)

ZTS was created when Pfizer spun off its pet health enterprise. ZTS is a pioneer in the discovery, manufacture and commercialization of pet health vaccines, diagnostic products and medicine. In fact, ZTS’ umbrella even stretches beyond companion animals to livestock. ZTS’ business primarily serves cats, dogs, horses, sheep, fish, poultry, swine and cattle.

Check out the ZTS POWR Ratings and you will find this stock is nearly flawless: “A” grades in Trade Grade, Buy & Hold Grade and Peer Grade. ZTS is ranked third of 239 stocks in the Medical – Pharmaceuticals space. The top analysts insist ZTS is likely to increase in price, possibly to $170.50, meaning it has potential for more upside.

The fact that ZTS serves both pet and livestock owners gives it that much better of a chance to excel during the recession. These two sales segments have been heading in opposite directions during the coronavirus pandemic. ZTS’ year-over-year pet product revenue increased 11% while its livestock product revenue is down 10%.

ZTS should also benefit from the fact that protein consumption per person is increasing, meaning its livestock segment will continue to grow. Look for ZTS to break it’s all-time high of about $169 in the not too distant future.

IDEXX Laboratories (IDXX)

IDXX has helped people care for their furry friends for nearly 40 years. The company has successfully segued from detecting diseases in poultry and livestock to caring for pets of nearly every variety.

IDXX services and products are tailored to the needs of pet owners, veterinarians and livestock farmers. The company also provides water testing services and even has a portable blood, gas, and electrolytes analysis system used in the medical diagnostics field. However, more than three-quarters of IDXX revenue stems from its Companion Animal Group. This wing provides veterinarians with information management solutions and diagnostic capabilities that bolster the well-being and health of dogs, cats and other pets. 

For the POWR Ratings system, IDXX has “A’s” in Trade Grade, Buy & Hold Grade and Peer Grade. The stock is ranked first of 142 in the Medical – Devices & Equipment category.

Shares of IDXX continue to remain strong and hit a new all-time high this week.

Freshpet (FRPT)

FRPT makes and markets fresh, all-natural food for furry friends throughout North America. These meals are somewhat unique as they are refrigerated. FRPT’s offerings are highlighted by meat-based meals including salmon, lamb and beef. FRPT pet food is sold under the names of Dog Joy, Dognation and Freshpet.

The POWR Ratings reveal FRPT also has “A” grades in Trade Grade, Buy & Hold Grade and Peer Grade. Furthermore, FRPT is ranked in the top 10 of nearly 60 Food Makers stocks. FRPT net sales are up one-third in the most recent quarter. This sales spike is the company’s best top-line growth in the past half-decade.

Shares of FRPT also are experiencing impressive momentum and made a new all-time high today of $124.98.  If investors look to take some profits off the table, consider adding this pet industry all-star to your portfolio on dips.

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ZTS shares were trading at $165.32 per share on Tuesday afternoon, down $3.23 (-1.92%). Year-to-date, ZTS has gained 25.47%, versus a 10.34% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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