The Panic-Proof Portfolio (Stockchase Research) Pet Valu Holdings PET-T TOP PICK Nov 12, 2024

The retailer of pet supplies in Canada opened 11 new stores last quarter, increasing its network to 794, and is targeting a total of 40-50 new stores in 2024.  Cash reserves are growing while debt is retired.  It trades at 22x earnings and its dividend is backed by a payout ratio under 40% of cash flow.  We recommend setting a stop-loss at $21, looking to achieve $37 -- upside potential of 38%.  Yield 1.5%  

We reiterate PET, Canada's largest pet food distributor with over 800 locations, as a TOP PICK.  The company announced completion of its BC distribution centre, the second largest in Canada (following its own in Ontario) and plans to grow in Calgary.  We like that cash reserves are growing, while debt is retired, while trading at 23x earnings.  We recommend trailing up the stop (from $21) to $23, looking to achieve $33 -- upside potential of 28%.  Yield 1.6%

Shares are basically flat over the past year do some quarterly misses, but its PE has fallen to 22.34x, below its 24.06x, making it an attractive entry point. It pays a moderate 1.72x dividend because the company is investing in expansion, which should bolster top and bottom lines in future quarters and reinforce the company's prominence in this healthy space.

Our PAST TOP PICK with PET is stagnating.  To remain disciplined, we recommend trailing up the stop (from $18) to $20 at this time.

Our PAST TOP PICK with PET is progressing well.  To remain disciplined, we recommend trailing up the stop (from $20) to $23 at this time.  

Our PAST TOP PICK with PET is progressing well.  To remain disciplined, we recommend trailing up the stop (from $23) to $26 at this time.  

Our PAST TOP PICK with PET has achieved its target at $32.  To remain disciplined, we recommend covering half the position at this time and maintaining the stop at $26.