1 Growth Stock Cornering a Huge Market

Pet Valu stock (TSX:PET) has cornered a massive market. Even though it’s new, it could be the growth stock you wish you’d bought way back when.

| More on:
A plant grows from coins.

Source: Getty Images

Are you looking for a top growth stock? Join the club — a massive club with too many members all vying for the same stocks. However, there are some companies that continue to be ignored, even if they corner a huge market.

For example? Pet Valu

Pet Valu Holdings (TSX:PET) is one example. Pet Valu stock corners a huge market, which is obviously the pet market. And as inflation and interest rates rise, making pet products more expensive, Pet Valu stock has become a great way to battle back the prices.

The main issue is that Pet Valu stock didn’t come on the market at a great time. The company had its initial public offering (IPO) just last year. Since then, shares have grown by 27%, which is certainly not bad.

During the year, it hasn’t been terrible either. Year to date, shares of Pet Valu stock are down by 6.6%. In the last three months, they’ve grown by 11%. That’s after coming down from a huge jump due to earnings.

What earnings told us

Pet Valu stock posted amazing earnings back in August. Same-store sales rose by 21.2%, as there was a rise in transactions with more customers buying more things. This caused the company to increase its full-year sales outlook to between $912 and $928 million for 2022.

Net income for the second quarter came in at $25.3 million, which was almost half of last year. Still, revenue rose 25% to $227.7 million as well. It looks like these numbers are set to keep rising as the pet store launches another 35-45 new store openings for the year.

Meanwhile, despite being a new stock, Pet Valu stock offers a dividend yield for its shareholders. That’s not huge, but still, a 0.72% dividend yield is better than no dividend at all.

A growth stock to consider

What’s great about Pet Valu stock is it’s still so new. Sure, this could be seen as a negative. But if you’re looking for a growth stock, it’s great to come in near or at the ground floor. That’s what you get here.

Further, Pet Valu stock has pretty much cornered the Canadian market in terms of pet stocks. If you want access to the increase in pet products during the pandemic, this is the way to do it. The company is at fair value right now, trading at 24.28 times earnings, so I wouldn’t call it cheap or undervalued. But looking long term, I would consider it a great deal. It has a solid handle on debt, offers a nice dividend, and has potential for stellar growth out of this market correction.

Bottom line

If investors can find a growth stock that offers stable income, they should grab it in spades. Even if it’s new. Pet Valu stock is an example of a company that can corner a huge market in Canada. Pets are a part of our lives, even if you don’t have one. So, if there’s a way to make cash on this industry, I suggest you take it. And Pet Valu stock is pretty much the only option out there.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Pet Valu Holdings Ltd. The Motley Fool has a disclosure policy.

More on Investing

Online shopping
Tech Stocks

Why Shopify Stock and Other Tech Stocks Jumped on Tuesday

Shopify (TSX:SHOP) stock and others started climbing on Oct. 4, but will the rise continue or fall back?

Read more »

healthcare pharma
Tech Stocks

2 Top TSX Tech Stocks to Buy in October

TSX tech stocks have been trampled in 2022. Yet, here are two top stocks on my buy-list that could have…

Read more »

A cannabis plant grows.
Cannabis Stocks

$1,000 Invested in Aurora Cannabis Stock at the Start of 2022 Would Be Worth This Much Today

Aurora Cannabis is a fundamentally weak cannabis stock which is trading 98% below all-time highs. Is ACB an undervalued stock…

Read more »

sale discount best price
Investing

Now’s the Time to Load Up the TFSA With These 2 Bargains

NFI Group (TSX:NFI) and Sleep Country Canada Holdings (TSX:ZZZ) stock are getting cheap amid the market reset.

Read more »

Growing plant shoots on coins
Tech Stocks

2 TSX Growth Stocks I’d Buy and Hold Forever

Investors can buy these growth stocks at significant discount and benefit from the steep recovery in their prices.

Read more »

Piggy bank next to a financial report
Investing

3 Top TSX Stocks to Add to Your TFSA or RRSP in October 2022

Are you looking for stocks to add to your TFSA or RRSP this month? Here are three top picks!

Read more »

Nickel ore is mined from the ground.
Metals and Mining Stocks

3 Top TSX Metal Stocks to Buy in October

Given their healthy growth prospects and attractive valuations, these three metal stocks could be excellent additions to your portfolio.

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

1 Energy Stock I Bought This Year — and 1 I Sold

I bought and sold Suncor Energy (TSX:SU)(NYSE:SU) stock this year. There is one other energy stock I bought and held.

Read more »