We are treating our pets more and more like humans, and it’s a global megatrend. Such megatrends have a lot to do with sustainable wealth creation, according to Insync Funds Management (Insync).
“Think of megatrends as enduring tailwinds that push some stock prices ahead of others, without cost,” says Insync CIO, Monik Kotecha. “The pet megatrend is one of 16 we have identified as ‘investment ready’.”
Mr Kotecha says our concern for the wellbeing of our pets now almost equals our concern for human family members. “We call it ‘pet humanisation’. Of course, this means certain services to vets are very big winners.
The rising middle class, coupled with explosive growth of single households is fuelling this megatrend, driving up pet ownership around the globe.
In the US alone, 70% of households own a pet, a third of which are millennial households. US citizens are spending around $1,100 on dog care and around $580 on cats a year. UK, Australia and the like are posting similar numbers
“In recessions, caring for pets is one of the very last things households cut back on too,” Mr Kotecha says
Insync has identified IDEXX Laboratories (IDEXX) as the trusted source of biological analysis for vets globally, manufacturing equipment and kits for diagnostic tests as well as the instruments and software used for testing.
“IDEXX has a huge growth runway for many years to come, as it's not only run really well, but it also benefits from the pet humanisation megatrend,” says Mr Kotecha. “A high return on invested capital, posting a profit of 20% per annum and it continues to grow strongly.”
Importantly, Mr Kotecha says not all companies impacted by a megatrend are best equipped to profit from them.
“Some companies may not even be aware that megatrends exist and therefore don’t utilise the impact they can create. Even the best run firms with long records of success, rarely thrive if they are running against or are operating in ignorance of megatrends.”