Market appears to be undervaluing PETM based on its upside being limited solely on historical and so-called industry- "average" p/e. The roll-out of new stores in conjunction with Banfield veterinary services is huge as PETM has not achieved a national footprint yet. Also, PETM is largely immune to typical retail cyclicity. The US population is growing, an the pet population is growing (1) as more families own pets and (2) [unfortunately] as pets procreate that have or will be abandoned and hopefully, eventually adopted. Also, pets age and require more care. AND don't forget the "bling" (or P. Hilton) effect. People are spending more on their pets than ever before. PETM is become a one stop shop: pet-related retail, veterinary services, and grooming. Rival Petco was bought out at a large premium, it's not unreasonable to think the same will happen to PETM. $35 target is a minimum. Risk is low. Max upside expected at ~40% of current pps to ~$40 w/i 1 year +/- 6 months.
$28.87 (12/22/06)
