New Index for Pet Care and Animal 'Farma'
By Mike Havrilla on 2/7/09
ETF Innovators
This past week, CNBC's Trish Regan took an
in-depth look at the pet industry and Westminster Dog Show (which runs Feb. 7-16), which attracts millions of viewers and thousands of dogs and pet owners vying to earn the Best in Show designation. Late last year, Ladenburg Thalmann analyst Nancy Hull
appeared on CNBC talking about PetMed Express (PETS) and the recession-resistant nature of the pet med business.
PETS turned out to be a good call – the stock is up about 20% in the past year, making it the second best gainer in the entire index. Other U.S. listed stocks in the index which posted gains over the past year include Neogen (NEOG) (animal diagnostics), Balchem (BCPC) (animal nutrition + health), and Central Garden & Pet (pet retailer).
The table at my website link below provides statistics for the 30 companies included in the ETF Innovators Global Pet Care and Animal 'Farma' Index. The index posted a loss of 20.4% in the past year on an equal weight basis, compared to losses of 35.1% for S&P 500 SPDR (SPY), 41.4% for Market Vectors Agribusiness (MOO), 17.7% for Healthcare Sector SPDR (XLV), and 19% for iShares S&P Global Healthcare (IXJ) over the past year.
The index tracks companies which are active in the following business segments: animal breeding, veterinary services, pet retailers, animal feeds/nutrition, and veterinary medicine/diagnostics. The index includes companies with market caps of $100M-$10B, which makes them more leveraged to the pet and animal care industry and also makes them ideal takeover candidates for larger players in animal health such as Pfizer (PFE), Schering-Plough (SGP) (Intervet), Novartis (NVS), Merck (MRK) + Sanofi-Aventis (SNY) joint venture (Merial), Wyeth (WYE) (Fort Dodge), and Eli Lilly (LLY) (Elanco).
In addition, favorable growth trends for the pet and animal care industry include the following:
1.)
Pet spending in the U.S. is estimated at $43.4B in 2008, up from $32.4B in 2003
2.) About 63% of U.S. households have a pet, which equals over 71M homes
3.) The worldwide market for animal healthcare, excluding bulk feed and nutrition products, is expected to reach just under $20B in 2008, experiencing growth of 26% from $15.6B in 2003.
$19.72 (02/08/09)
