The pet industry is booming. In fact, it’s one of the most resilient industries out there, and seems to be growing no matter what the larger economy does. The industry generated nearly $124 billion in sales in 2023, up from about $97 billion in 2019, according to the American Pet Products Association (APPA).
The COVID-19 crisis only seemed to accelerate America’s love for pets. People turned to dogs, cats and other animal friends to ease their loneliness during pandemic lockdowns and beyond. Even before the pandemic, more than 38 percent of American households owned a dog, according to the American Veterinary Medical Association. More than 25 percent had a cat. Overall, 70 percent of American households own a pet, according to a 2023-2023 APPA survey.
So how can an investor get a piece of this action? You’ll have to dig beyond the companies that primarily offer food and treats, as these companies are often just part of a larger conglomerate.
The sector’s resilient growth has made it attractive to consumer goods companies, and these companies were among the first to capitalize on the pet trend with food and treats. The larger companies in the sector often have subsidiaries focused on pets or pet food:
- Colgate-Palmolive (CL): This consumer goods company produces food through its Hill’s Pet Nutrition business.
- General Mills (GIS): The consumer food conglomerate owns the Blue Buffalo pet food brand.
- J.M. Smucker (SJM): This consumer goods company produces pet food under the brand names Rachael Ray Nutrish, Meow Mix and Milk-Bone.
- Mars: The private company behind candy bars also produces pet food under the Mars Petcare brand.
- Nestlé (NSRGY): The Swiss consumer company owns the Purina brand of pet food products.
- Spectrum Brands (SPB): This smaller company distributes the Eukanuba and Iams brands in Europe and owns many other brands.
But while they own well-known brands, pet-related products make up a relatively small portion of their total sales, often somewhere in the neighborhood of 15 percent or less. So the performance of these stocks is much more dependent on the rest of the company’s products, such as cereal, toothpaste, jelly, candy, water, and more.
Those looking for more pure play exposure to the growing pet category may want to look elsewhere, even though many of the above companies have good long-term records.
6 ‘Pure Breed’ Animal Stocks for the Growing Trend
If you’re looking for a “pure breed” experience with America’s preference for dogs and cats, you still have some options, especially ones that play into other aspects of people’s relationships with their animals, like healthcare or toys . Here are some names to look at:
1. Chewy (CHWY)
Chewy is an e-commerce play in pet supplies, offering toys, pet pharmaceuticals, supplies and more. It has an enviable market share and the stock rose after its June 2019 IPO, at one point tripling its closing price on the first day, before falling back as part of the broader market downtrend.
2. Trupanion (TRUP)
Trupanion offers pet insurance for your companion animals. With pet care costs rising, some owners think it’s a good idea to get a policy for a member of their extended family. Only a small share of pets are insured in the U.S., leaving room for growth, bullish investors say. It is currently the market leader in what is expected to be a fast-growing market in the coming years.
3. BARK (BARK)
This company went public in 2023 and is known for its Bark Box, a monthly package of toys, treats and more for your dog, although it also offers other dog-themed monthly deliveries. With tens of millions of dogs in the US waiting for the mailman, the company could have attractive growth prospects.
4. PetIQ (PETQ)
PetIQ provides veterinary services to pet owners, in more than 2,900 locations with retail partners such as Walmart and Target, as well as pet health care products at more than 60,000 distribution points. The company owns pet brands such as PetArmor and Sentry that can protect your animal’s health.
5. Idexx Laboratories (IDXX)
Idexx is an interesting player in the pet market and offers diagnostic tests for pets (think dog blood tests), medical instruments and software for veterinary practices. But Idexx also offers test products for water and livestock, poultry and dairy, among others.
6. Petco Health and Wellness (WOOF)
With more than 1,500 retail locations in the US, Mexico and Puerto Rico, Petco covers the pet care map. The company provides products and services across all dimensions of pet ownership, from the sale of certain types of small animals, to food and other supplies, to training and medical care. Petco also offers an e-commerce site and mobile app that facilitates product pickup and delivery.
Investing in pet-friendly businesses
Investing in socially responsible companies has become quite popular in recent years, and one area of the market that has received more attention lately is pet-friendly companies.
This trend has led people to increasingly look for pet-friendly or “cruelty-free” businesses as they evaluate where to put their investment dollars. But it’s harder than you might think, because many companies test products at least a little on animals, or manufacture or sell items that contain animal products. Some organizations rate companies on whether they are ‘cruelty free’, but this often means choosing companies that have nothing to do with animals (such as banks, insurance companies and consultancy firms) rather than companies that have a direct positive impact on animals . animal welfare.
An ETF that specifically focuses on animal friendliness is the American Vegan Climate ETF (VEGN). The fund is based on an index that tracks ESG (environmental, social and governance) criteria and excludes criteria that harm or test on animals. The top five holdings (as of November 2023) include UnitedHealth (UNH), Mastercard (MA), Nvidia (NVDA), Tesla (TSLA) and Visa (V).
So this ETF’s top holdings literally have nothing important to do with pet welfare, but they are not actively harming animals, according to the criteria of the underlying index.
In short
Americans love their pets, so pet-related businesses should continue to grow – at least for the foreseeable future. Investing in this area could reward investors handsomely over time if current trends continue.
However, if you’re looking for a socially responsible niche to invest in, it can be tricky. In addition to a fund of companies that don’t harm animals, you may also want to own companies that actively try to promote their welfare. And that means more prep work and analysis, which can take hours of extra time, but this list of the best ESG ETFs might help you spot some winners.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making any investment decision. In addition, investors are advised that the past performance of investment products does not guarantee future price increases.
