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PetSmart, Inc. (PETM): A Smart Investment to Make Today

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The happiest place on Earth for humans may be Disney World, but the happiest place on Earth for our pets is PetSmart, Inc. (NASDAQ:PETM). I do not know whether it is the smell of the food, other dogs, or just the thrill of being in public, but my puppies go absolutely crazy on the walk through the parking lot and into the store. My male puppy barks his head off if he sees a neighbor dog outside of my home, but seeing a dog in this store is like he’s found a long lost friend. PetSmart is not just a great place to take your pets, but it is also the perfect company to invest in! Let us take a deeper look into what makes this company worthy of consideration.

Store, Salon, and More

PetSmart’s stores have all of the pet products you need, along with grooming, training, and adoption services. This is the most well-known part of the company, but they also operate PetsHotels and Doggie Day Camps. PetsHotels are overnight boarding facilities for people heading out on trips or who just cannot watch their dogs or cats for a period of time. There are 195 in-store facilities to date, and this number will continue to grow. These “hotels” are staffed by hand-picked professionals and hold the PetSmart name, giving the pet owners much more peace of mind than with other boarding facilities. Doggie Day Camp is like daycare for your dog, in which they will play with other dogs and PetSmart, Inc. (NASDAQ:PETM) associates, all while under close supervision. Finally, there are Banfield Pet Hospitals located in 60% of stores. This pet hospital provides a full range of health care services as well as emergency services. PetSmart owns a 20.5% equity stake in the operator of these hospitals.

Petmed Express Inc (NASDAQ:PETS) is an internet-based pet supplies and information provider. They carry all major brands and hand select the healthiest products for your pets. They also have the largest network of veterinary pharmacists in the world, making them a great source for pet medications and advice. However, since they are internet-based, they are limited in the services they can provide. With a market cap just under $250 million, they are about 1/27th the size of PetSmart, Inc. (NASDAQ:PETM). Their earnings growth has slowed drastically, rising just 5% in 2012, and they are expected to grow under 1% in 2013. They have a high dividend of 4.6%, but this is not high enough to compare to the growth and dividend combination PetSmart offers.

Amazon.com, Inc. (NASDAQ:AMZN) is another internet-based retailer with a share of the pet supplies industry. You can buy just about anything imaginable on Amazon, including pet food, toys, and supplies. However, since they are internet-based like PetMed, they do not offer pet services. A major downside for Amazon is customer service relating to pet products. If a customer has questions or needs a product recommendation, they will need to contact someone with experience and expertise, which would result in a call to PetSmart, PetMed Express, or a local veterinarian. Also, PetSmart’s prices are just as competitive as Amazon’s, and if you order online from PetSmart you can elect to pick up your order at a local store for free. Amazon has the free “super-saver” shipping option, while PetSmart ships all orders over $49 for free. There are some cases where Amazon will win in the pricing war, but PetSmart has the advantage as of now.

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