The ProShares Pet Care ETF (CBOE: PAWZ), the first ETF dedicated to the pet care industry and related investment opportunities, has plenty of tailwinds and some of those favorable factors could prove potent for the fund this year.

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.

The diverse retail exposure featured in PAWZ, both brick-and-mortar and online, could benefit the fund this year.

“U.S. retail sales of pet clean-up and odor-control products reached more than $4 billion in 2019, up from $3.5 billion in 2014, resulting in a 3.4% compound annual growth rate (CAGR) for the period,” according to the new study Pet Litter, Clean-Up, and Odor Control: U.S. Market Trends and Opportunities, 2nd Edition.

Make A Chewy Call

Online pet retailer Chewy, an important PAWZ is poised for growth this year after gaining some momentum late last year.

“Cat litter is by far the largest category in the pet clean-up and odor-control market and accounts for 73% of the overall pet clean-up market. Puppy/training pads and dog waste bags and accessories together account for 17% of the market. Pet clean-up/odor-control preparations account for the remainder of the market,” according to Packaged Facts.

Chewy has “more than 45,000 products available, provides cost-effective overnight delivery of pet supplies to approximately 80% of the United States (~100% in two days) through seven fulfillment centers,” according to ProShares.

Other data points cement the notion of PAWZ as a credible long-term play as Americans increasingly treat their pets as parts of their families and spend accordingly.

Related: Leuthold Group Launches Core Investment Fund ‘LCR’ 

Camp Bow Wow, the largest and leading doggy daycare, and boarding franchise announces a record franchise sales year with a 16 percent increase in units sold that continued to propel the company forward as a leader in the pet care industry in 2019,” according to Pet Age.

Investors added $26.3 million to PAWZ last year.

For more on core investing strategies, visit our Core ETF Channel.

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.

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