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In the booming pet care market, undervalued pet stocks are strategic choices for investors looking at long-term portfolio expansion. These stocks are attached to the strong growth potential of the pet industry, marked by a 30% advance in global pet food sales from 2019 to 2023.
Fueling investor enthusiasm is the pet care market’s value of $246.6 billion, with forecasts predicting a massive climb to $368.8 billion by 2030. This potential growth indicates buoyant expanding the sector and indicating lasting success for pet care companies. However, major players in the pet care space have overshadowed some up-and-coming businesses.
Therefore, investors should gravitate toward undervalued gems in the current landscape, investing in companies poised for a prosperous future. With that said, here are three undervalued pet stocks that are set to provide investors with high returns.
BARK (BARK)
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bark (NYSE:BARK) is a pet-centric tech business that has successfully grown their customer base through a variety of services. Its stock has been in the green over the past year, delivering more than 16% gains on the back of its foray into the pet consumables sector.
The company’s introduction of a new treat line expands its range of consumables, adding its unique and fun brand to each item. Additionally, its fourth consecutive partnership with Dunkin’ introduces a creative new collection of dog toys, tapping into popular culture, appealing to dog lovers and enhancing its appeal in the space of pet care.
Financially, BARK stands out with its forward price-to-book (P/B) ratio of 1.70 times below the sector median of 45.3%, indicating value potential. With revenue of $125.1 million, beating estimates, and a ‘strong buy’ rating from TipRanks analysts, BARK paints a positive picture for its future, with upside potential of 44.4%.
Trupanion (TRUP)
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Trupanion (NASDAQ:body), a pet insurance provider, stands out for its great offers for cats and dogs in regions including the US and Canada. TRUP has carved a niche by covering a variety of conditions, from hereditary to congenital, without setting payout limits.
Additionally, Trupanion reached a significant milestone in enrolling its one millionth pet across its brands in North America and Continental Europe. This achievement reflects TRUP’s commitment to providing flexible insurance solutions, including up to 100% reimbursement on eligible expenses, underscoring its growing influence among pet owners . As such, top-line growth remains strong for the company, with a 22.50% bump year-over-year (YOY), exceeding the sector median of 340%. As we move forward, forward earnings growth rates are equally compelling at 15.35%.
Furthermore, TRUP’s financials are compelling, with a forward price-to-sales (P/S) ratio standing at a competitive 0.99 times, which is lower than the sector median of 2.51 times. TipRanks analysts also rated it a ‘moderate buy’ with 26.54% upside potential, indicating its potential for continued growth.
Central Garden and Pet (CENT)
Source: Pavel Kapysh / Shutterstock.com
Central Garden and Pet (NASDAQ:CENT), known for its leadership in garden and pet supplies, has shown impressive performance, with its share price up 36.67% over the past year. This uptick reflects its innovation in the lawn, garden and pet care markets and its strategic move to acquire TDBBS, a premium provider of natural dog chews and treats. This acquisition diversifies Central’s product lineup with high-demand items including bully sticks and jerky and while strengthening its eCommerce positioning. Moreover, with free-cash-flow (FCF) margin of 9.30%, above its 5-year average of 412%, CENT can continue to expand its business with joy.
Financially, Central Garden & Pet shows solid health, with a forward P/S ratio of 0.82 times, which is below the sector median of 32.7%. Additionally, its forward P/B ratio impressively undercuts the sector median by 55%. TipRanks analysts support this positive outlook, giving CENT a ‘moderate buy’ rating with a predicted 24.85% upside.
As of the date of publication, Muslim Farooque does not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writers, subject to InvestorPlace.com’s Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A lifelong gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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