The Three Most Undervalued Pet Stocks to Buy in March 2024

Muslim Farooque

March 12, 2024 4 min read

TRUP
CENTA

In the flourishing pet care market, undervalued pet stocks are strategic choices for investors eyeing long-term portfolio expansion. These stocks latch onto the pet industry’s powerful growth potential, marked by a 30% surge in global pet food sales from 2019 to 2023.

Fueling investor enthusiasm is the pet care market’s worth of $246.6 billion, with forecasts predicting a skyrocketing ascent to $368.8 billion by 2030. This growth potential indicates the sector’s vigorous expansion and signals enduring success for pet care firms. However, major players in the pet care space have overshadowed some up-and-coming businesses.

Hence, investors should pivot towards the undervalued gems in the current landscape, investing in companies gearing up for a prosperous future. With that said, here are three undervalued pet stocks set to provide investors with high gains.

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BARK (BARK)

Bark, the parent company of BarkBox, distribution center. BarkBox is a monthly subscription service providing dog products.

Source: Jonathan Weiss / Shutterstock.com

Bark (NYSE:BARK) is a pet-centric tech business that has successfully grown its customer base through diversified services. Its stock was in the green last year, delivering more than 16% gain on the back of its foray into the pet consumables sector.

The company’s introduction of a new treat line expands its consumables range, adding its unique, fun brand to each item. Additionally, its fourth consecutive collaboration with Dunkin’ introduces a creative new collection of dog toys, leveraging popular culture, appealing to dog lovers and enhancing its appeal in the pet care space.

Financially, BARK stands out with its forward price-to-book (P/B) ratio of 1.70 times impressively below the sector median by 45.3%, signaling potential value. Coupled with revenue of $125.1 million, outpacing estimates, and a ‘strong buy’ rating from TipRanks analysts, BARK is painting a positive picture for its future, with an upside potential of 44.4%.

Trupanion (TRUP)

a veterinarian holding a small white dog

Source: Shutterstock

Trupanion (NASDAQ:TRUP), a pet insurance provider, stands out with its robust offerings for cats and dogs in regions including the U.S. and Canada. TRUP has carved a niche by covering a variety of conditions, from hereditary to congenital, without setting payout limits.

Moreover, Trupanion reached a significant milestone enrolling its one-millionth pet across its brands in North America and Continental Europe. This accomplishment reflects TRUP’s commitment to providing flexible insurance solutions, including up to 100% reimbursement on eligible expenses, underscoring its growing influence among pet owners. Consequently, top-line growth for the firm remains excellent, with a 22.50% bump year-over-year (YOY), eclipsing the sector median by 340%. As we advance, forward revenue growth rates are equally compelling at 15.35%.

Furthermore, TRUP’s financials are compelling, with forward price-to-sales (P/S) ratio standing at a competitive 0.99 times, markedly lower than the sector’s median of 2.51 times. TipRanks analysts also rate it a ‘moderate buy’ with a 26.54% upside potential, signaling its potential for sustained growth.

Central Garden & Pet (CENT)

Illustrative Editorial of Central Garden and Pet Company website homepage. Central Garden and Pet Company logo visible on display screen. CENT stock.

Source: Pavel Kapysh / Shutterstock.com

Central Garden & Pet (NASDAQ:CENT), known for its leadership in garden and pet supplies, has demonstrated remarkable performance, with a share price rising 36.67% over the past year. This uptick reflects its innovation in the lawn, garden, and pet care markets and its strategic move to acquire TDBBS, a premium natural dog chews and treats provider. This acquisition diversifies Central’s product lineup with high-demand items including bully sticks and jerky and while bolstering its eCommerce positioning. Moreover, with a free-cash-flow (FCF) margin of 9.30%, trumping its 5-year average by 412%, CENT can continue to expand its business with aplomb.

Financially, Central Garden & Pet showcases robust health, with a forward P/S ratio of 0.82 times, substantially below the sector median by 32.7%. Additionally, its forward P/B ratio impressively undercuts the sector median by 55%. TipRanks analysts support this positive view, giving CENT a ‘moderate buy’ rating with a predicted 24.85% upside.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.