6 Small-Cap Pet Stocks for Animal-Lovers to Play the $60 Billion Industry

Henry Truc  |

Pets have never had it this good. It’s estimated that Americans spent over $60 billion on their domesticated companions in 2015. That’s more than a 25% increase than what they spent just five years ago. What’ more, they’re expected to spend even more than that this year. Granted, costs have gone up during that time, but pet owners have also been splurging a little more as well. Everything from animal trackers, to premium organic pet foods, to doggy daycare, to even pet insurance, those simple human luxuries are not limited to humans anymore. But pets are increasingly being considered more than just companions these days. They’re essentially a member of the family, and how can anyone really put a price on family?

With today being National Pet Day, make sure you take the time to show your pet just how much you love and appreciate them, lest you find yourself in the doghouse. But, after you’ve done that, it’s probably a good idea to take skim through some of the pet stocks in the market making a mint off of animal lovers like you. To give you a leg up, here’s a quick look at six pup-sized (in terms of market cap) pet companies to get you started on your search.

Aratana Therapeutics, Inc. (PETX)

Price: $6.34
Business: Therapeutics for Pets
Market Cap: $224.15M
52-Week Range: $2.56 to $19.99
Year-to-Date Performance: 13.62%

Aratana Therapeutics is focused on the licensing, development and commercialization of pharmaceutical products for dogs and cats. Its pipeline includes therapeutic candidates targeting pain, inappetence, cancer, viral diseases, allergy and other serious, unmet or underserved medical needs. In March, the company announced that the FDA’s Center for Veterinary Medicine approved GALLIPRANT® (grapiprant tablets) for the control of pain and inflammation associated with osteoarthritis in dogs. The drug is expected to be available in the fall. It’s none too soon either as shares of Aratana are actually down about 60% over the past year and the company lost $84 million for full-year 2015.

Kindred Biosciences, Inc. (KIN)

Price: $3.80
Business: Pet Therapeutics
Market Cap: $75.38M
52-Week Range: $ 2.90 to $7.91
Year-to-Date: 11.76%

Kindred Biosciences is a development-stage biopharmaceutical company focused on dogs, cats and horses. The company’s lead drug candidate is Zimeta, which treats pyrexia (fever) in horses. Kindred is in the process seeking FDA approval of Zimeta through the New Animal Drug Application (NADA) process. The company is also working on weight loss in cats, non-regenerative anemia in cats, equine gastic ulcer syndrome in horses, metabolic syndrome in horses, and others. Despite being down 45% over the past year, Kindred does boast some notable investors among its shareholders, including Seth Klarman’s Baupost Group, Ariel Investments, and more.

Central Garden & Pet Company (CENT)

Price: $14.82
Business: Pet Products and Supplies
Market Cap: $743.27M
52-Week Range: $8.47 to $18.27
Year-to-Date: 9.62%

Central Garden & Pet Company sells garden and pet products to retailers. The company’s pet segment accounts for over 60% of its revenue ($359.8 million in Q1), with a product portfolio that includes animal health through brands ADAMS™ and ZODIAC®; aquatics and reptile through brands AQUEON®, CORALIFE® and ZILLA®; bird & small animal through brands KAYTEE®, Forti-Diet® and CRITTER TRAIL®; dog & cat through brands TFH™, NYLABONE®, FOUR PAWS®, IMS™, CADET®, PINNACLE® and AVODERM®; and equine through brands FARNAM®, HORSE HEALTH™ and VITAFLEX®. The company is extending its hot streak, and is up 53.7% over the past year.

Trupanion, Inc. (TRUP)

Price: $9.59
Business: Pet Medical Insurance
Market Cap: $272.34M
52-Week Range: $6.27 to $10.00
Year-to-Date: -1.74%

Trupanion is a leading provider of medical insurance for cats and dogs in North America. Shares of the company have been on a bit of a rollercoaster ride since October, when the stock price bottomed in the mid-$6 area, only to surge to its peak of $9.90 on Dec. 30 before sliding down again to its January lows of around $7.80. Since then, it’s jumped 20% and is right around its 52-week high. As for the actual fundamentals, Trupanion reported a loss of $17.2 million, or 62 cents per share, for all of 2015 on revenue of $147 million.

Freshpet, Inc. (FRPT)

Price: $7.06
Business: Premium Pet Food
Market Cap: $236.77M
52-Week Range: $5.60 to $25.46
Year-to-Date: 16.84%

Freshpet is a provider of natural fresh and refrigerated meals and treats for dogs and cats in North America. The company sells its products under the Freshpet brand, as well as under the Dognation and Dog Joy labels. The company IPO’d in November 2014 at $15 a share, and gradually rose to an all-time high of $25.46 in April of last year. Since then, times have been tough on Freshpet shareholders, with the stock on a precipitous decline into the single digits. On the bright side, the company did post a surprise profit of 8 cents per share on revenue of $30.2 million. Wall Street had been expecting a loss. Still, it’s probably going to be a while before shares recoup the 72.3% its lost in the past year.

Abaxis, Inc. (ABAX)

Price: $44.19
Business: Medical Devices
Market Cap: $1.00B
52-Week Range: $37.71 to $64.95
Year-to-Date: 20.41%

Abaxis provides portable blood analysis systems for human or veterinary patient care in the medical industry worldwide. The company’s veterinary business accounts for over 75% of its revenue. Abaxis is the only entrant on the list that actually pays a dividend (1% yield based on current share price). In January, the company beat profit expectations but missed on revenue for Q3. Abaxis said it earned 35 cents per share on revenue of $52.9 million in the period. Shares sold off after the earnings results on concerns of declining sales. Abaxis shares are down 30% over the past year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
KIN Kindred Biosciences Inc. 6.70 -0.20 -2.90 116,395 Trade
CENT Central Garden & Pet Company 27.24 -0.38 -1.38 33,651 Trade
TRUP Trupanion Inc. 32.55 -0.61 -1.84 73,521 Trade
FRPT Freshpet Inc. 45.13 0.12 0.27 51,237 Trade
PETX Aratana Therapeutics Inc. 4.95 0.02 0.41 1,078,431 Trade

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