We recently compiled a list of the 10 Best Pet Stocks To Invest In According to Analysts. In this article, we are going to take a look at where Central Garden & Pet Company (NASDAQ:CENT) stands against the other pet stocks.
Pet Industry at a Glance
The pet industry is a rapidly growing sector. It was valued at approximately $320 billion in 2023 and is projected to reach nearly $500 billion by 2030, according to Bloomberg Intelligence’s Pet Economy Report. This growth is driven by a rising global pet population and an increasing trend of pet humanization, where owners treat pets as family members and are willing to spend more on their care, including premium food and health services.
The report notes that the US is positioned to remain the largest pet market. In the United States, the market is expected to approach $200 billion by 2030, with significant spending on veterinary care and pet healthcare products.
Ann-Hunter Van Kirk, Bloomberg Intelligence Senior Biopharmaceutical Analyst and co-author of the report, noted that improved pet nutrition is contributing to longer lifespans for pets, which in turn drives up spending on healthcare for aging animals. Analysts expect this trend of increased spending on pet health to continue over the next decade.
Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report, highlighted a notable rise in consumer spending on pet products, predicting that the pet food market could grow by more than 50% by 2030.
Shopping Trends Among Pet Owners
In April 2024, Acosta Group released the results of a new study highlighting important insights into pet parents’ shopping habits. With two in three US households owning at least one dog or cat, spending on pet food, treats, and healthcare has become a significant part of household budgets. The study found that 96% of pet parents consider their pets family members, and 86% are willing to adjust their budgets to accommodate their pets’ needs. This presents a valuable opportunity for retailers and brands to target this large audience.
The study also highlighted key preferences among pet parents regarding food choices. 42% prioritize high-protein content for their pets, followed closely by 40% who focus on joint care and 38% who seek probiotics for gut health. Additionally, 36% of pet parents are interested in fresh, minimally processed foods. Brand loyalty plays a significant role in purchasing decisions, with 57% of dog owners and 59% of cat owners sticking to brands they have previously purchased. However, impulse buying is common, especially among millennials, with 58% influenced by in-store promotions. Most pet owners are turning to mass retailers, pet specialty stores, and online retailers for their pet care purchases, indicating a shift in how pet care products are accessed.
Overall, the pet industry remains a vital part of the global economy, driven by strong consumer attachment to pets and an ongoing commitment to their well-being.
Our Methodology
To compile our list of the 10 best pet stocks to invest in according to analysts, we reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 pet stocks, we focused on the top pet stocks that analysts believe have the most potential for growth. We ranked the 10 best pet stocks to buy based on their average price target upside potential according to analysts as of October 29, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Central Garden & Pet Company (NASDAQ:CENT)
Average Price Target Upside Potential According to Analysts: 28.58%
Number of Hedge Fund Holders: 20
Central Garden & Pet Company (NASDAQ:CENT) is an American company and a market leader in the Pet and Garden industries. The company offers more than 65 high-quality brands that help consumers care for their pets, grow their gardens, and support their communities. These include 3D Pet Products, Amdro, Aqueon, Cadet, Farnam, Ferry-Morse, Four Paws, Kaytee, K&H, Nylabone, and Pennington.
In November 2023, the company announced that it had acquired TDBBS, LLC, a provider of premium natural dog chews and treats based in Richmond, VA. This acquisition has enhanced Central Garden & Pet Company’s (NASDAQ:CENT) product lineup and strengthened its eCommerce capabilities.
In the third quarter of fiscal 2024, Central Garden & Pet Company (NASDAQ:CENT) reported net sales of $996 million, a slight decline from $1.02 billion the previous year. However, the pet segment showed resilience with net sales increasing by 1% to $508 million, largely due to the TDBBS acquisition and growth in consumable pet products. Operating income for the pet segment surged by 39% to $83 million, reflecting improved profitability.
Central Garden & Pet Company (NASDAQ:CENT) is focused on streamlining its operations. The company has decided to exit its underperforming pottery business over the next fiscal year and close a live plants distribution facility. These strategic moves aim to simplify operations and improve overall efficiency. With a strong financial performance in the Pet segment and ongoing efforts to enhance its business operations, Central Garden & Pet Company (NASDAQ:CENT) is well-positioned for future growth.
Analysts currently hold a consensus buy rating on the CENT stock and the 1-year median price target set by analysts indicates a potential upside of 28% from current levels. This brings Central Garden & Pet Company (NASDAQ:CENT) to the 4th spot on our list of the best pet stocks to invest in.
According to Insider Monkey’s database of over 900 hedge funds, as of Q2 2024, Central Garden & Pet Company (NASDAQ:CENT) was held by 20 hedge funds.
Overall, CENT ranks 4th on our list of the best pet stocks to invest in according to analysts. While we acknowledge the potential of CENT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CENT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.