2018 Investment Series Post 3

Everyone loves payday. Just like everyone else, once I get that sweet deposit in the bank it starts burning a hole in my pocket. Before much time I am ready to blow it all on a shopping spree. My store of choice is the stock market, and I’m shopping for the best deals on companies. Here is what I dropped my $1,000 on this Friday, February 2nd.

PetMed Express Inc (PETS)

The third pick of the Let’s Be Millionaires investment series goes to PetMed Express Inc (PETS).

Petmed Express Inc, also known as 1-800-Petmeds, is “America’s Largest Pet Pharmacy” and they do the vast majority of their business online (over 80%.)

Why not diversify my portfolio with a classic pet healthcare play?

About The Stock

PETS stock traded between 10 and 20 dollars a share for 10 whole years between 2006 and 2016 before finally breaking out to new all-time-highs early in 2017. The stock exploded from around $20 to a high of $53 posted just a few weeks ago on January 19th 2018. The stock has since cooled off a bit, pulling back to the $44 mark.  PETS currently has a P/E multiple of 26 which is not bad considering the large growth the company has recently experienced, as well as the potential for future growth. In the company’s annual report, the estimated size of the pet medication market was said to be 4.3 billion dollars, while the company is currently only capturing 250 million dollars in sales revenue.  The stock also has a 2.25% dividend at current price levels which means I can expect to receive $22.50 worth of payments over the course of a year for a $1000 investment.

With a market cap of 914 million dollars, Petmed Express Inc. (PETS) falls into the small-cap category. It could also be categorized as a healthcare stock, a domestic stock, and a growth stock.

The Speculation

It seems like everything is moving online. To me, the business model of PetMed Express Inc just makes sense. Why take the time to go pick up medicine for your pet when you can handle it all online, especially for recurring prescriptions? I honestly won’t be surprised if Amazon finds a way to start delivering human prescriptions right to our doorstep within a few years.

I also would not be surprised if a larger player in the pharmacy space decided that pet medicine was a worthy endeavor and decided to acquire Petmed Express inc. A big player could easily pick up this company and scale it a lot faster through existing networks. Heck, CVS could just place advertisements within their own stores saying that they now fill pet prescriptions and they would probably double the revenue overnight while also becoming “the pet friendly drug store.”

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2018 Investment Series Post 1

2018 Investment Series Post 2

 

1 thought on “2018 Investment Series Post 3”

  1. Solid choice! I agree with your logic. You should find a way to give us monthly updates on the whole portfolio, so we can see how the $1,000 you put in to the your previous investments has changed as well. Looking forward to the next one!

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