Company’s Major Growth Phase Over

A long-time favorite company of this column is PetMed Express (NASDAQ/PETS). You might have seen this company’s advertisements on the television. The company is America’s largest online drugstore for small and large animal medicines.

This stock has been a market darling since the beginning of 2002. I’ve written about this company for almost two years and it’s been a top performing stock that’s part of my pet care investment theme. The great thing about the pet care business is that people don’t stop spending money on their pets. Even if there’s a recession, people still need to feed and vaccinate their pets.

So, PetMed Express went from about $3 per share to just over $20 per share which it hit at the beginning of this year. The stock’s down considerably at this time, because the company’s growth is slowing. Quite clearly, the company’s major growth phase is over, and the stock market speculated on this reality over the last few months.

In its second fiscal quarter ended September 30, 2006, the company’s revenues grew a more modest 13% to $43.8 million, up from revenues of $38.7 million generated in the comparable quarter of the previous year.

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Net income was $3.3 million, or $0.14 diluted per share, for the quarter ended September 30, 2006, which was up 22% from net income of $2.7 million, or $0.11 diluted per share, generated in the second fiscal quarter ended September 30, 2005.

The PetMed Express story isn’t over. The stock’s chart illustrates that it is still in a long-term upward trend, but it will take a considerable amount of time for it to creep back to its recent 52- week high.

PetMed Express is the perfect example of a successful, small-cap investment opportunity. This stock and the company’s story is worthy of your review if you want to make more clear in your mind what a great investment looks like. Print off this company’s stock chart and review its press releases for the last few years. Although it sounds so simple, this review process is invaluable in improving your own personal stock picking abilities.