Is Petco a Good Investment?

PHOTO CREDIT: Petco

OVERVIEW

Petco Health and Wellness Company Incorporation is a company based in the United States. The company specializes in pet services and products. They operate over 1500 stores in the United States and Mexico where they offer adoption and vet services. They also sell a wide range of pet products (like toys and food) in their stores. The company was founded in 1965.

Why You Should?

  1. The COVID-19 pandemic has benefited the company. Pet ownership during this pandemic has soared as people stayed at home and decided to bring their furry friends into their homes. This has caused an increase in every product and service that Petco has to offer. This has benefited the company and investors in the company.
  2. Under a Biden administration, there will be more stimulus. This will help people have more disposable income. Some of this disposable income can be spent on pet products and services. This will help the company see higher sales volumes. This will also benefit investors in the company.
  3. Petco is a one-stop pet shop. They offer consumers adoption services, and then also offer vet services. They also offer all of the essential and non-essential products in their stores. This kind of “ecosystem” of complementary products and services will benefit the company. This will also benefit investors in the company.
  4. Petco has invested in the future of the pet industry. For example, they have invested in their virtual pet service, something that has seen strong demand during this pandemic. They have also spent some money in order to upgrade their stores for the future. This will benefit the company in the future and will also benefit investors in the future.

Why You Should Not?

  1. Petco faces tough competition in the pet industry. Aside from small business competition, the company faces tough competition from companies like Chewy.com, Petsmart, Amazon, Walmart, and many other companies. This competition might hurt the company in the future and might also hurt investors.
  2. The COVID-19 pandemic has hurt some of the company’s businesses. For example, they have had to limit operations across all of its stores and spend money in order to maintain high cleaning standards. This has hurt the company in the short-term and might also hurt investors as well.
  3. Petco recently went public just last week. The stock soared on its first day of trading and has fallen after that. I would wait for some time for the stock price to stabilize and fall a bit before investing in this company.

MY OPINION

I think that Petco is a decent long-term investment due to the impacts from the pandemic, the hopes for more stimulus, its complementary set of products and services, and its investments for the future of the pet industry. However, tough competition, impacts from the pandemic, and a high stock price might hurt the company and investors in the company.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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