3SOF

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:



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 )

and I read today Adams Harkness have a target of 13$ on PETS