One of Our Fave Picks Defying the Dismal Market
Thursday, October 23rd, 2008
By Mitchell Clark, B.Comm. for Profit Confidential
It’s a rare find now to have a stock going up in this market, especially if that stock is a micro-cap. A lot of investors are now extremely risk-averse and not just plain uninterested in taking on new positions in equities. This makes the opportunities better for speculators right now, but I think it’s fair to assume that your investing time horizon is now longer.
The broader stock market continues to experience terrible trading action, highlighting just how fragile investor sentiment continues to be. So, when a stock is outperforming in this kind of environment, I think it’s worth following.
The company I’m referring is one that I’ve written about quite a bit in the past. PetMed Express, Inc. (NASDAQ/PETS) is part of an investment theme of mine that I like to think of as less susceptible to recession. People don’t stop taking care of their pets — no matter what the economy is doing. If anything, a company like PetMed will benefit in a slowing economy because customers for their products are looking for the best deals in the marketplace.
PetMed Express, founded in 1996, is one of America’s largest pet pharmacies, delivering prescription and non-prescription pet medications and health and nutritional supplements for dogs and cats directly to the consumer through its 1-800-PetMeds toll-free number and on the Internet through its web site at www.1800PetMeds.com.
The company just announced it financial results for its second fiscal quarter of the year. PetMed beat consensus Wall Street estimates for both earnings and revenues.
According to PetMed, its revenues for the quarter ended September 30, 2008, came in at over fifty-nine and a half million dollars, representing solid growth of 16% over revenues of fifty-one and a half million dollars generated in same quarter last year.
Net income for the period was $5.8 million, or $0.25 per diluted share, as compared to net income of $4.5 million, or $0.18 per diluted share. This represents an impressive increase to earnings per share of well over 30%.
Total revenues for the six months ended September 30, 2008, were almost one hundred twenty-eight million, also up 16% from the same six-month period last year.
Net income in the first half of this fiscal year was just over twelve million dollars, or $0.53 per diluted share, as compared to net income of close to eleven million dollars, or $0.44 per diluted share, representing an increase of about 20%.
PetMed cited that its reorder sales increased by 18% to just over forty-one million dollars in its latest quarter. New order sales increased by 11% to more than eighteen million dollars. The company also repurchased some 90,000 shares of its own common stock during the last period.
I like this company’s business model and the products it sells. For years, veterinarians have had a virtual monopoly on pet medications and their prices were obscenely high. It’s no wonder that veterinary lobby groups continue to fight with PetMed – they want to keep that monopoly pricing power for themselves.
PetMed Express is just a great business in my mind. It’s heartening to see a stock that’s not going down in this market.
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Tags: stock market, stock-picking
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.
