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Pet Industry Seems Recession-Proof: ETF & Stocks in Focus

Sanghamitra Saha
·3-min read

The pet industry has been growing by leaps and bounds lately. According to a 2021 survey from the American Pet Products Association, 70% of U.S. households — roughly 90.5 million — own a pet, as quoted on Yahoo Finance. About 35% of owners spent more on pet supplies during the pandemic, and 51% are willing to pay more for “ethically sourced” and “eco-friendly” products.

Americans shelled out about $123.6 billion on their pets in 2021, including health foods and luxury items, a 19% jump from $103.6 billion in 2020. Ten years ago, owners spent only $53.3 billion on their pets. It shows that despite the current inflationary environment, spending on pet care hasn’t been squeezed.

According to PetSmart CEO J.K. Symancyk, the industry is seeing some of its strongest growth in years, quoted on Yahoo Finance. The pandemic and the lockdowns also led many households to adopt a pet. Notably, the coronavirus lockdown in 2020 witnessed the percentage of U.S. households with pets increase to an all-time high of 70%.

Additionally, millennials (32%), Gen Xers (24%), and Baby Boomers (27%) are the demographics with the highest percentage of pet ownership. These age groups are in their key earning years and making sufficient money to shell out on their pets.

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The global pet care market size was $207.90 billion in 2020. The market is expected to grow at a CAGR of 5.6%, per Fortune Business Insights. Per ProShares, the industry has grown in America every year since 2001, even during the Great Recession. The latest study reveals that despite high inflation, Americans are still splurging like never before for their pets.

Against this backdrop, below we highlight a few stocks and a pureplay ETF for the winning trend in the pet care industry.

Stocks in Focus

Chewy CHWY

Chewy Inc. operates as an online pet retailer. The Company offers pet products which include dry and wet food, toys, mats, biscuits, vitamins and supplements. The stock has a top VGM score of A.

PetMed Express PETS

PetMed Express, Inc. and subsidiaries is a leading nationwide pet pharmacy. The Company markets prescription and non-prescription pet medications, health products, and supplies for dogs and cats, direct to the consumer. The Company offers consumers an attractive alternative for obtaining pet medications in terms of convenience, price, and speed of delivery.

Zoetis ZTS

The company is a leader in the animal health space with a focus on both livestock and companion animals in seven major product categories: vaccines, anti-infectives, parasiticides, dermatology, other pharmaceutical products, medicated feed additives and animal health diagnostics.

IDEXX Laboratories IDXX

The company is a developer, manufacturer and distributer of products and services primarily for the companion animal veterinary, livestock and poultry, water testing and dairy markets.Companion Animal Group (CAG) made up about 89.9% of revenues in 2021, up 21.1% from 2020. This segment provides veterinarians with diagnostic capabilities and information management solutions that enhance the health and well-being of pets.

ETF in Focus

ProShares Pet Care ETF PAWZ  

The underlying FactSet Pet Care Index consists of U.S. and International companies that potentially stand to benefit from interest in, and resources spent on, pet ownership. The fund charges 50 bps in fees.

The fund has 71% exposure to the United States, followed by 14.4% in the United Kingdom. Veterinary Pharmaceuticals (29.5%), Veterinary Diagnostics (11.95%), Pet And Pet Supply Stores (11.04%) are some of the segments that get a double-digit weight in the fund.


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PetMed Express, Inc. (PETS) : Free Stock Analysis Report
 
IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
ProShares Pet Care ETF (PAWZ): ETF Research Reports
 
Chewy (CHWY) : Free Stock Analysis Report
 
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