The ProShares Pet Care ETF (CBOE: PAWZ), the first ETF dedicated to the pet care industry and related investment opportunities, has been mostly steady to start 2020, but that steadiness could give way to the significant upside thanks to a batch of compelling fundamental factors.
PAWZ includes sectors such as veterinary pharmaceuticals, diagnostics, services, and product distributors; pet and pet supply stores, and pet food and supply manufacturing. Healthcare and retail stocks make up a significant portion of the PAWZ roster and the ProShares ETF has the potential to outperform traditional funds tracking those sectors.
Data confirm that 2020 could be a big year for PAWZ and its components. One of the more compelling data points indicates about two-thirds of American households have at least one pet.
“The 2019-2020 APPA National Pet Owners Survey estimates U.S. pet industry spending at more than $75 billion for 2019, up from $72 billion in 2018, as spending grows in categories like food, medication, and veterinary care services,” said ProShares in a recent note.
PAZW Primed For Pluses
Demographic trends are also seen providing an assist to the pet care investment thesis and PAWZ. A slew of compelling data points exists confirming the potential potency of investing in ideas and sectors relevant to millennials.
“Millenials have delayed getting married, having children and moving to the suburbs, but they have increasingly sought the companionship of household pets and the APPA found that Millenials now represent the largest segment of U.S. pet owners,” according to ProShares.
The millennial generation is classified as U.S. citizens born approximately between 1980 and 2000. Millennials account for one-quarter of the nation’s population and are positioned to become a strong part of the workforce within the next decade.
Investment themes expected to be bolstered by millennials include e-commerce/online retail and fintech.
Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through ETFs that target the e-commerce segment. On that note, the presence of Chewy (NYSE: CHWY) in PAWZ, among others, positions the ETF to capitalize on e-commerce trends.
“Chewy, the pet products e-commerce company that went public in 2019, reported 40% year-over-year growth in net sales in its most recent quarter,” notes ProShares. “CEO Sumit Singh highlighted that more than 5 million customers have created ‘Pet Profiles’ on the site to receive recommendations for breed and age-appropriate treats and toys for their animals, and an increasing number of customers are using the companies ‘My Pet Prescriptions’ product to manage their animals’ medication.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.