In this article, we discuss the 5 best pet stocks to buy now. If you want to read our detailed analysis of the pet industry, go directly to 10 Best Pet Stocks To Buy Now
5. Elanco Animal Health, Inc. (NYSE:ELAN)
No of HFs: 43
Total Value of HF Holdings: $1.49 Billion
Headquartered in Indiana, United States, Elanco Animal Health, Inc. operates an innovative and product and solution company that aims to enhance animal health. The company was founded in 1954 and held its IPO in 2018 priced at $24 per share. Shares of ELAN soared 32% over the last twelve months. At the end of the fourth quarter, ELAN reported a 44% year-over-year increase in revenue to $1.1 billion.
With an $853 million stake in Elanco Animal Health, Inc., Scott Fergusons’ Sachem Head Capital owns 27 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 43 hedge funds held stakes in ELAN at the end of the fourth quarter, versus 21 funds at the end of the third quarter.
Mila Supinskaya Glashchenko/Shutterstock.com
4. Colgate-Palmolive Co (NYSE:CL)
No of HFs: 46
Total Value of HF Holdings: $1.51 Billion
Colgate-Palmolive Co was founded in 1806 by William Colgate. They own a wide variety of brands that aim to provide a healthier future for people and animals. Their pet nutrition product Hill’s reported $680 million in net sales in 2019. The company offers a dividend yield of 2.35%. During the fourth quarter of 2020, the company reported an increase of 7.5% in net sales brought about by recent investments in digital advertising and e-commerce.
As of the end of the fourth quarter, 46 hedge funds in Insider Monkey’s database of 887 funds held stakes in CL compared to 47 funds in the third quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of Colgate-Palmolive Co with 11.9 million shares, worth $1.02 billion.
VGI Partners mentioned a few stocks in its FY 2019 investor letter and CL was one of them.
Here is what VGI Partners had to say about the stock:
Colgate has a large international exposure with 70% of its revenue generated from outside the US, including 50% from high growth emerging markets. Colgate’s global market share of toothpaste is a staggering 42%, up from 35% in 1995. The below chart also shows that Colgate’s global market share today is almost three times its nearest competitor. The brand’s share of some of the largest emerging markets is even higher, with Brazil at 72% and India at 50%.
Colgate’s high share of the toothpaste market in these geographies owes a great deal to the company’s decision to set up distribution early, providing a first-mover advantage. Market shares in toothpaste are generally quite stable as consumers show strong loyalty to the brand of toothpaste they grew up with. We believe Colgate’s emerging market exposure is a significant positive over the For personal use only long-term as growth in population and disposable income outpaces that of developed markets.
Colgate follows a strategy of long term premiumisation. Once it has established a leading market position, it slowly but steadily introduces superior products at a higher price point and gross margin. This progression is almost too slow to be noticed by customers but over many years has led to significant gross margin expansion for the business. Remember the original plain red tube of Colgate toothpaste that contained no teeth whitening, mint stripes or sensitive pain relief? You can still buy this at the local supermarket at a relatively low price, however Colgate has most likely traded you up to one of their more expensive products.
3. IDEXX Laboratories, Inc. (NASDAQ:IDXX)
No of HFs: 46
Total Value of HF Holdings: $26.6 Billion
Headquartered in Westbrook, IDEXX Laboratories, Inc. distributes products and services to veterinaries, dairy markets and livestock poultry. The company first listed on NASDAQ in 1991. Shares of IDXX soared 93% over the last twelve months. During the fourth quarter of 2020, the company reported a 19% growth in revenue driven by steady growth in their livestock products.
As of the end of the fourth quarter, 46 hedge funds in Insider Monkey’s database of 887 funds held stakes in IDXX, compared to 41 in the third quarter. Terry Smith’s Fundsmith LLP is the biggest stakeholder of IDEXX Laboratories, Inc. with 4.2 million shares, worth $2.11 billion. An insider purchased 375 shares worth $266 in August 2019. The stock is up 85% since then.
Baron Partners Fund mentioned IDEXX Laboratories, Inc. in its Q3 2020 investor letter.
Here is what Baron Partners Fund had to say about IDEXX:
“Shares of veterinary diagnostics leader IDEXX Laboratories, Inc. contributed to performance in the quarter. Veterinary visits continued to exhibit a “V” shaped recovery from the initial pandemic-related slowdown, with visits growing at double-digit rates. IDEXX’s competitive trends are outstanding, and we expect new proprietary innovations and field sales force expansion to be meaningful contributors to growth. Margins are increasing significantly. We believe margins can exceed 30% over time.”
2. Zoetis, Inc. (NYSE:ZTS)
No of HFs: 61
Total Value of HF Holdings: $2.38 Billion
The worldwide animal health company Zoetis, Inc. ranks 2nd in our list of 10 best pet stocks to buy now. ZTS offers a dividend yield of 0.67%. During the fourth-quarter revenue increased 8% to $1.8 billion. The company believes this growth will drive them to a robust 2021.
According to our database, the number of ZTS long-held hedge funds positions increased at the end of the fourth quarter of 2020. 61 funds hold a Zoetis, Inc. position compared to 58 funds in the third quarter. The company’s most significant stakeholder is William Von Mueffling’s Cantillon Capital Management, with 2.9 million shares worth $481 million.
1. Merck & Co. Inc (NYSE:MRK)
No of HFs: 82
Total Value of HF Holdings: $7.17 Billion
Merck ranks 1st on the list of 10 best pet stocks to buy now. The company offers vaccines and medicine. MRK operates its animal products under Merck Animal Health brand which was founded in 1921. In 2020, Merck Animal Health reported full-year sales of $4.7 billion. In February 2021, the company purchased PrognostiX Poultry Limited, a leader in the poultry development industry.
As of the end of the fourth quarter, 82 hedge funds in Insider Monkey’s database of 887 funds held stakes in MRK, compared to 80 in the third quarter. Irving Kahn’s Kahn Brothers are the biggest stakeholder of the stock with 731 thousand shares worth $59 million.
Saturna Capital Corporation mentioned a few stocks in its Q1 2020 investor letter and Merck & Co. Inc was one of them
Here is what Saturna Capital Corporation had to say about Merck & Co. Inc:
“Bristol-Myers and Merck benefited from low valuations, strong balance sheets, and attractive dividends going into the crisis, minimizing the negative fallout.”
Please also see Top 10 Large-Cap Healthcare Stocks to Buy now and 10 Best Healthcare Dividend Stocks
