The pet industry may not seem like an exciting industry, but I think it's one of the best. We really love our furry children and we're willing to pay a pretty penny on them.
Here are some good reasons why you should be interested in the pet industry:
Growing number of pets
The pet population has been steadily growing alongside the human population. In-fact, the ratio of pets to humans is growing, meaning that the pet population is growing faster than humans.
There are now 4.8 million dogs and 3.8 million cats in Australia.
High recurring revenue
Recurring revenue is a pleasing factor in any industry. Around 80% of dogs and two thirds of cats visit a vet each year, which provides a regular and growing source of earnings for vets like Greencross Limited (ASX: GXL).
Growth of miscellaneous services
There's a wide range of additional pet services that businesses are jumping on. Grooming, pet insurance, puppy school and pet hotel bookings are just a few of the services that Greencross is tapping into.
Overall growth
All of these factors have helped the national pet industry grow by 42% since 2013 to be worth $12 billion.
If Greencross and National Veterinary Care Ltd (ASX: NVL) can keep growing in this sector, then they could be good winners.
National Vet Care should beat the market because of how many vet clinics it's likely to acquire over the next few years.
Greencross should beat the market because of how low its price/earnings ratio is and its plan to co-locate vets inside Petbarns.
Foolish takeaway
Greencross is currently trading at 13x FY18's estimated earnings with a grossed-up dividend yield of 5.05%.
National Vet Care is trading at 32x FY17's earnings with a grossed-up dividend yield of 1.61%.
I think both are buys at today's prices and I'm fairly confident they will beat the market over the next year and five years.
