Petmed Express, Inc. (PETS). The Group's principal activity is to market prescription and non-prescription pet medications, health and nutritional supplements and accessories at discounted prices through the Pet Med Express catalog, customer service representatives and on the Internet.
Earnings were out on July 26th:
«PetMed profit jumps 75% as sales soar
(8:13 AM ET) NEW YORK (MarketWatch) -- PetMed Express Inc. (PETS: news, chart, profile) posted Monday fiscal first-quarter net income of $3.15 million, or 15 cents a share, up from $1.8 million, or 8 cents a share in the same quarter a year ago. The supplier of pet medication said sales for the period ended June 30 rose 24% to $43.6 million. The Thomson First Call average estimate was for earnings of 14 cents a share. The Pompano Beach, Fla. company said it acquired around 217,000 new customers in the quarter compared with 191,000 in the year-ago period. PetMed said the advertising cost of acquiring a new customer was around $35 in the first quarter, down from $41 in the same quarter a year ago. On Friday, the stock was unchanged at $8.80.»
15 cents a share on the fiscal first quarter, if we just extrapolate this for the entire year with no growth we get 60 cents in profit per share. The closing price for PETS yesterday was $10.38, so the P/E ratio is $10.38/$0.6 = 17.3
17.3 earnings multiple for a stock that has earnings growth in the range of 75% is not right. The stock is now lower than it was last year, and earnings have improved 75% and revenues rose 24%. I believe this is a business that when it grows more, it just grows more, it is a matter of notoriety.
Technically the stock is enjoying a strong uptrend and yesterday it penetrated the zone of the prior all time highs:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=3172;image)
I believe PETS will make a new all time high on this move, above $13 a share, so I'm buying the stock today at the open, as always 6.66% of the 3 Stocks on Fire Portfolio.
Everyday after the close I will update the analysis on PETS until I sell the stock. At www.3stocksonfire.org I manage a public and diversified portfolio of stocks which is up 140% since April 2005.
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Bought PETS @$10.52
A normal pullback just after I bought ... no problem, since I buy breakouts with volume, when stocks generally are up a lot over the short term, it is usual to see a pullback after I buy. But the signal was there and most of the times the stock comes back and makes new highs.
I'm willing to give a lot of room to PETS, I really like this stock from a fundamental and technical point of view. I won't even try to predetermine profits (that would be a trading mistake, by the way), but I think this bull run won't stop south of a new all time high, above $13.
This site is really having technical problems, I'm having an hard time doing these updates.
PETS trend just gets steeper and steeper, because the stock is very undervalued as you can read on this thread. It may pullback on profit taking, but I only see higher prices on the horizon.
That was an unexpected drop today. Very steep!
Everything that was up a lot is down a lot today. But I prefer to hold the stocks with bullish trends.
Anyway, support is coming for PETS with many ascending trendlines, so expect a bullish reaction over the coming days (well, perhaps not today or monday, but after support is hit).
PETS recovered a bit by the close on Friday, but support wasn't hit. Anyway, do you remember what I've said about really bullish stocks, those that you can't buy at support because demand is too strong?
PETS might be one of those cases, since fundamentals are so attractive in my opinion.
I'll continue to hold the stock for the foreseeable future.
Hey Dave
What do u say about the heavy insider selling?
http://finance.yahoo.com/q/it?s=PETS
-Garry
Quote from: ggrewal on August 08, 2005, 03:56:33 AM
Hey Dave
What do u say about the heavy insider selling?
http://finance.yahoo.com/q/it?s=PETS
-Garry
Good question Garry :) You see, there's no 100% sure indicator or strategy to trade stocks. Insiders can be wrong too. These particular insiders look like they're wrong indeed, since they're selling since $7 and the price just keeps on rising and it is above their selling.
My thinking goes like this: if this heavy insider selling isn't taking the share price down, then there's really strong demand behind the scenes. Demand absorbed the insider sales and the price is higher now. We don't know why demand is so strong, but we know it is, so one should buy and hold this stock.
That's what I'm going to do.
The 8% rise in PETS today goes to show not even insiders are always right.
What do we get from this in terms of a lesson?
I guess it's something like this: «Stop looking for the sure thing indicator. It doesn't exist».
DAVID NOT ONLY ARE INSIDERS NOT ALWAYS RIGHT BUT PEOPLE SHORTING ON THE NOTION ARE FORCED TO COVER CREATING A MAJOR SQUEEZE EXAMPLE FORD
looks to me like PETS is breaking out a flag pattern with volume...
the low of today is right at another (steeper) ascending trendline.. looks great!
Thanks for your post freimuch and your analysis right on the money nikao.
PETS did make it to a new 52 week high on the intraday today, but it couldn't hold those levels until the end of the session. But I liked the volume, on the strong side, and the fact that the stock couldn't reach support - demand is too strong.
PETS just need to work a bit around the $10.55 short term resistance level, but everything, from technicals to fundamentals, points to higher prices on PETS.
Quote
Coverage initiated on PetMed Express by Adams Harkness
Quote
10-Aug-05 Adams Harkness Initiated Buy
extra coverage is always good! (if it says 'Buy' that is ;) )
:D
and I read today Adams Harkness have a target of 13$ on PETS 8)
Thanks for your post nikao, have a nice day :)
PETS is having some work with the $10.55 resistance level, but, considering technicals and fundamentals I believe it is just a matter of time for the stock to break this resistance on the upside.
We see some insiders selling shares, but I don't find that very important, they can be selling for many reasons ... the ratio of insider selling/insider buying in the general market historically stands at 2.5 and we've had big bull markets anyway. There are many motives an insider can be selling his extra shares not related with the company's fundamentals or prospects.
I'll continue to hold PETS for the foreseeable future.
QuotePETS is having some work with the $10.55 resistance level, but, considering technicals and fundamentals I believe it is just a matter of time for the stock to break this resistance on the upside.
Voila, $10.55 was taken out on the upside with volume above average. $13 is on reach now. I'll continue to hold PETS.
when a stock is moving up like this one, don't you think it's wise to shift your stop loss along with it (to protect your winnings...)
I see a new, higher angled, ascending trendline which could be used as the stop loss (today it would be somewhere near 10,30)
basically my question is.. do you always shift your stop loss when a new, steeper, trendline is forming? (you could also use one trendline BELOW the one you choose )
I took another look at the chart of PETS and I think I might use another stop loss...
In the bull trend since June, PETS printed 5 white nice big candles on high volume.. after each candle there was a consolidation phase..but the stock never closed lower than the bottom of the white candle..
I think we could say that also this time the stock has to hold above the open of yesterdays candle, or else the stock has lost (short term) momentum to go any higher..
any thoughts?
I like your analysis nikao.
You said:
Quotebasically my question is.. do you always shift your stop loss when a new, steeper, trendline is forming? (you could also use one trendline BELOW the one you choose )
When you're doing this its called a «trailing stop», and not a stop loss. A stop loss is, obviously as the name says, to stop a loss. A trailing stop is a stop order to protect profits. Trailing stops go higher as the price goes higher.
I don't like to use trailing stops alone - like «I'll sell if it falls 5% from the peak» - they need to have some technical reasoning, like a trendline or a moving average.
QuoteIn the bull trend since June, PETS printed 5 white nice big candles on high volume.. after each candle there was a consolidation phase..but the stock never closed lower than the bottom of the white candle..
I think we could say that also this time the stock has to hold above the open of yesterdays candle, or else the stock has lost (short term) momentum to go any higher..
any thoughts?
I welcome these thoughts on PETS nikao. In fact, I like your reasoning so much that I will follow it: sell if the stock is set to close below $10.30. Buy it back later at some ascending support line.
Going now to my daily update of PETS, this was a hard day to advance for any stock. The general market went down heavy and PETS fell in sympathy. But it held the $10.55 level, prior resistance, now support. That's a positive. The retest was made with lower volume than the breakout, which is another positive.
I hope PETS gains traction at the $10.55 support and pushes higher tomorrow. I don't know if it will get some help from the general market ... if the stock is set to close below $10.30, I agree with nikao, short term momentum was lost, and I'll take a small loss and possibly try to buy the stock back at a lower support level.
what's the name of this pattern by the way? .. I know there is a known candle pattern, but I recall that one is about 3 black candles going down within the body of one white...
it closed a bit below 10,30.. but ill give it a chance... PETS did actually close once below a white candle (beginning of august).Volume was again slighlty less then yesterdays volume.. all good signs.. the low of today didn't reach the trendlne (also a good sign) .. so enough reasons for me to hold..
1thing: PETS has to go up tomorrow ....i
Jesus, stop that, I'm sure nikao has learned is lesson well, a lesson he will never forget (when you have a plan, and you SHOULD have one, FOLLOW IT !)
I hope you already got out, if not it doesn't matter, never get ;D or :'( because of market developments, after all, it's only money !
I've suffered so much on the market that I never get happy when I win ... or sad when I lose. Our body, with enough time and enough trades, develops anticorps to those feelings about money.
You take care :)
OUCH!
i got my lesson allright.. got out at 9,78, a 6,58% loss including transaction costs
trying my luck at MSPD right now.. with some reserve for GTCB ...
this takes my portfolio even further down :(
I don't know why this one was sold........
Cabot letter this week:
PetMed Express (PETS) Price: 19 ================================
Why The Strength?
-----------------------
Americans have more than 60 million pet dogs, almost 70 million pet cats, and about 9.2 million horses. And those pets are expensive; a recent study showed that we spend more than $1,100 per year on a pet. Petmed Express profits by making it cheaper and more convenient to buy those pets both prescription and non-prescription medications and other products from catalogs and via the Internet. Nearly 70 percent of the company's sales are for flea- and tick-control products and other non-prescription health/nutritional supplements. Prescription medicines accounted for most of the remaining 30 percent. Petmed Express offers the same high-quality medications that are sold through pet stores and veterinarians' offices, but has lower overhead than those bricks-and-mortar locations. By offering shop-from-home convenience to dog, cat and horse owners, the company gets great repeat business by saving customers both time and money. Ordering can be done via the Internet or through the company's 800 number and all orders over $39 are shipped free. According to one analyst, Petmed Express has only about 4 percent of the estimated $3 billion pet medicine/supplies market, but is dominant in the faster-growing direct channel. With an impressive 38 percent Q3 profit increase on increased sales, Petmed Express is on a roll.
Technical Analysis
-----------------------
This is the first appearance of PETS in Top Ten. The stock came public in January 2004 at about 10, but soon headed for the basement. Since bottoming out at 4 in July 2004, however, the stock has been on a regular advance/pullback regimen. We're encouraged to see that the pullbacks are becoming both shorter and milder as analysts and institutional investors (both still scarce) are taking increasing notice. PETS took a big leap on January 23 on a blowout earnings report and has been base building, getting ready to tackle its resistance level at 19. We like it.
Suggested Buy Range: 17-19
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PetMed's Strong Q2 Fueled by Repeat Customers
Monday October 23, 11:48 am ET
By C. Max Magee, BullMarket.com
Shares of PetMed Express (Nasdaq: PETS - News) are moving higher today after the mail-order pet medication retailer delivered its fiscal Q2 report.
For the quarter ended September 30th, PetMed earned $3.3 million or 14 cents a share, up from $2.7 million, or 11 cents a share, a year ago, which beat First Call estimates by a penny. Revenue came in at $43.8 million, up 13.2% year over year, but it missed analyst expectations of $45.4 million.
The company highlighted a 23% jump in sales from reorders, and CEO Menderes Akdag said, "We are currently focused on optimizing our advertising campaigns and improving our current service levels to capture additional market share."
The solid results likely come as a relief to PetMed investors who have seen the company's share price cut nearly in half from its March highs. Once a small-cap darling, PetMed shares slid after analysts downgraded the shares following their big run-up, with the potential for rising customer acquisition costs being one of the main concerns.
We highlighted the stock in March in an article for subscribers (several weeks later the article appeared on Forbes.com) before all the downgrades hit and noted several other "yellow flags" that presaged the stock's decline. Chief among them was a spate of insider selling by the CEO, CFO, four directors, and 10% owner (at the time) Tricon Holdings in the five months prior. We also pointed out the potential for competition from larger pet retailers like Petsmart (Nasdaq: PETM - News) and Petco (Nasdaq: PETC - News) as well as from veterinarians. Finally, we cited the possibility of supply problems, since major pharmaceutical manufacturers have declined to sell to PetMed, which must instead rely on distributors.
Customer acquisition costs may remain an issue -- PetMed spent $36 per new customer in Q2 compared to $33 a year ago -- but other factors, including the growth in repeat customer business and PetMed's ability to meet analysts' lowered expectations appear to have ended the stock's slide for now. It's worth noting as well that since March, insider selling has for the most part dried up, with only Tricon continuing to sell shares.
Going forward, the company is optimistic that customer acquisition costs will decline post-election once the company no longer has to compete with political ads for TV time. Still down -34% (including today's move to the upside) from when we first wrote about it, our bearish stance has become more neutral in the near term. However, competitive risks still remain, and we'll continue to watch how this story unfolds to see which way our opinion sways.