Zoetis Inc (ZTS-N)

Livestock business grows at 5%, pet business has grown like gangbusters. Great products in pipeline, great chance to grow business. Great R&D. 

It is a higher growth name and is the world's largest player in animal care. He still likes it - people still spend money on pharmaceuticals even in a downturn.

Long owned this. A great pipeline of products in their pet business. Fine balance sheet. People spend $3,000 annually on their pet. Their livestock business will come back. This did well during Covid, but shares fell back after. He expects strong quarters of growth ahead.

Leads with 17% market share in animal healthcare (and livestock). Their pet business thrived during the pandemic. People continue to buy pets and are spending more on pets per capita. Recessions don't slow down pet spending.

Very innovative, lots of great products coming out. Pet healthcare continues to be a priority for pet owners. Anticipates 2023-24 being a really good year.

ZTS operates as an animal health medicine, vaccine, and diagnostic product. ZTS has performed well in the last five years with consistent, stable and recurring revenue growth, and is now trading at 30x times' Forward P/E, which is at the lower end of historical averages. The balance sheet is OK, with net debt of $4.6B. 
Total debt is around 2.4x times trailing twelve-month cash flow of $1.9B, and cash flow declined slightly around 14% compared to $2.2B last year largely due to investment in inventories. 
Based on consensus estimates, sales are expected to grow by 8% on average over the next few years. Overall, the company has been growing, increasing dividends and repurchasing shares consistently over the last few years, the main issue is the valuation: it is trading at a premium level given the high quality of the business. W
e would be comfortable averaging into ZTS over time. 
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