Pet stocks are hit or miss post-Covid shutdowns, says Jim Cramer
A Covid hangover is upon us, which means we’re just not doing things we did during lockdown, CNBC’s Jim Cramer said Friday.
We buy fewer personal computers and spend less on our homes – and instead prioritize travel and leisure.
Pets can be subtle victims of the current “long on money, short on time” spending mode, Cramer said.
At one time, money seemed like no object when it came to caring for pets.
“Almost anything pet-related made fortunes for investors and companies that got into the category to take advantage of it,” Cramer said.
While the “humanization of pets” is still in play, not all companies are benefiting, Cramer said.
“Now you have to be more selective with your pet plays,” Cramer said.
Pure pet stocks like Petco and Chewy have become “two of the most controversial stocks in the entire market,” Cramer said.
Petco remains over-indebted as a $2.3 billion company with $4.2 billion in total liabilities, Cramer said. Meanwhile, Chewy is expected to barely break even next year based on earnings per share, he said.
But if you like the pet theme and don’t want to take a lot of risk, General Mills is a buying option. The company is a “good safety name” if you’re worried about the economy, Cramer said. The pet segment was also instrumental in helping General Mills post the best numbers for the quarter of all consumer packaged goods except Hershey, he said.
Smucker is also “another good safety play with a pet food kicker” that can work its way up, Cramer said. The company has doubled down on its pet snack business with Milk-Bone, otherwise preferring strong coffee and peanut butter brands.