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Apple fiscal Q4 earnings preview

Zoetis is Higher Than Ever Thanks to Pet (and Farm) Spending

Neil George
·3 mins read

As we discussed yesterday, spending on pets hasn’t slowed down during the pandemic.

According to a survey from TD Ameritrade, 33% of Americans have considered adopting pets because of the pandemic.

For dog and cat owners alike, the cost can be higher than expected. Respondents to the survey who owned dogs said they spent $1,201 a year on their pets. Cat owners spent $687 per year.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Now, this survey data isn’t exactly news to you if you read yesterday’s article. I already mentioned that the American Society for the Prevention of Animal Cruelty (ASPCA) estimates the average annual cost of caring for a dog at $1,843.

But you know what “average cost” doesn’t cover? What people are willing to spend on their furry friends — particularly when it concerns their health.

I would do anything to keep my miniature dachshund, Blue, healthy, and in the TD Ameritrade survey, dog owners said they were willing, on average, to pay $3,307 treating their dogs’ health conditions. Cat owners were willing to pay an average of $1,991.

So, just as we know there is money in human health care, we also know there’s money in pet health care too.

Formerly Pfizer, Still Just as Profitable

Zoetis (NYSE:ZTS), a class-leading animal health and vaccine company, including animal-to-human virus vaccines, used to be a subsidiary of pharmaceutical giant Pfizer (NYSE:PFE), but it spun off in 2013.

It sells products in over 100 countries, and it doesn’t just serve pet owners. In addition to caring for cats and dogs, the company makes products to support cows, chickens, pigs, fish and horses.

Farmers were hit hard because of the pandemic, partially because of the disruption to our supply chain. Often, farmers had products they simply couldn’t sell to their commercial buyers, and unfortunately, there wasn’t a way to get those excess products to consumers.

But the USDA stepped in to help, providing $16 billion in direct payments and another $3 billion helping to get those commercially grown products to the mouths of consumers.

All this is to say, the impact on farmers hasn’t kept ZTS from thriving. And with more people considering buying pets now, you’d expect ZTS to climb higher, which it has.

Daily Chart of Zoetis, Inc. (ZTS) — Chart Source: TradingView

If you look at the chart above, you can see that ZTS is already higher than it was before the crash on March 23. And since bottoming on March 23, the stock has risen over 70%, beating the S&P 500’s roughly 50% gains.

Its revenues continue to climb, with the compound annual growth rate (CAGR) running at 5% over the past 10 years, and I think ZTS is definitely a buy.

Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps — and into safe, top-performing income investments. Neil’s new income program is a cash-generating machine…one that can help you collect $208 every day the market’s open. Neil does not have any holdings in the securities mentioned above.

The post Zoetis is Higher Than Ever Thanks to Pet (and Farm) Spending appeared first on InvestorPlace.