WOOF: Veterinary Value

05/09/2016 8:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Human beings aren't the only ones driving the healthcare industry right now; animal hospitals are also seeing significant increases in demand, explains Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.

That's been good news for VCA (WOOF), which owns 703 animal hospitals and 60 diagnostic labs in 41 states and Canada.

The North American animal healthcare market reached $11.3 billion in sales last year, and is expected to keep growing to $14.3 billion by 2020.

Better research and medicine is allowing vets to treat diseases in dogs, cats and other animals that were previously deemed untreatable.

VCA's sales are growing consistently as a result, and the company reported another solid quarter last week with 13% revenue growth and a 32% earnings increase.

The company acquired 24 new hospitals during the quarter, which certainly helped; it brought in $84 million in extra revenue.

Despite its place atop a thriving industry, WOOF's stock hadn't budged much until recently. After peaking at $61 last August, the stock spent the rest of 2015 consolidating, then broke to the low side this January, sliding all the way $45.

It didn't really start to get going again until mid-February, but WOOF has been on a steady upwards push ever since.

In late March, it broke above six-month resistance at $56, pushed above $60 by tax day, then jumped to $64 last week on the strength of its solid earnings results.

It has pulled back slightly to $63, but while pullbacks have been brief and shallow during WOOF's current three-month rally, this isn't a go-go stock.

Thus, we advise looking for dips of a point or two before entering. You can set a stop below $58.

Subscribe to Cabot Top Ten Trader here.

By Mike Cintolo, Editor of Cabot Top Ten Trader

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