One company that I’ve mentioned quite a few times in this column is PetMed Express Inc. (NASDAQ/PETS). This small-cap company is very successful and is currently experiencing a lot of price momentum on the stock market. Institutional investors are now participating in the stock. If you’ve looked into this innovative company, you’ll know that has grown significantly in recent years.
I really like this company, and I believe it should continue growing for many years to come. Shareholders love the stock, although the company has made some enemies in the marketplace, particularly among veterinarians. Some don’t like the fact that this company is selling so-called “prescription” medicines to individual customers without veterinarian consent. Consumers think PetMed has the right idea.
PetMed Express has shown guts to stick it out and fight the traditional veterinary industry by selling pet medications and other health products for dogs, cats, and horses. The veterinary industry is still upset at the company, because it has directly challenged their monopoly on pet healthcare products — products that provide veterinary hospitals with significant profits.
One of the company’s biggest sellers is heartworm and flea prevention pills that pet owners typically use for dogs every year. It used to be that you could only purchase such products from your local veterinary hospital, at a high price to pay for the vet’s overhead and profit margin. It only makes sense that consumers like PetMed — it reduces their costs by eliminating the middle- man. The company saw an opportunity within the industry and acted on it.
A company’s business doesn’t have to be complicated, but it does have to be innovative. Only by revolutionizing an existing industry can a company truly create sustainable wealth for stockholders. PetMed Express serves to illustrate the kind of successful, wealth creating companies we all want to find in the stock market.