By Geoffrey Smith
Investing.com -- Man’s best friend is his dog. An investor’s best friend in these troubled times, it seems, is the company that offers goods and services to his dog.
On a day when the screens were again awash with red, Pets at Home (LON:PETSP) shares rallied 22% after the company told the stock exchange that like-for-like sales had continued to grow at over 10% on the year through early September. As a consequence, it said, underlying pretax profit is likely to be ahead of the market’s expectations.
The stock is now up nearly 20% from its pre-pandemic high and up 34% year-to-date. Not bad for a stock that doesn’t rely on algorithms, artificial intelligence, or any of the other current buzzwords of the investing world, but rather the enduring willingness of a human being to allocate a large part of his or her income to the yowling, yapping, vomiting ball of fur that mitigates the loneliness of government-enforced separation from other humans.
The company has, of course, had to beef up its online distribution of food and grooming products, and it has had to accept fewer visits to its grooming salons. Elective veterinary medicine, like elective human procedures, has suffered during the lockdown, and may suffer again if the U.K. tightens its social distancing restrictions any longer.
However, it is surely right to point to what it calls the “the inherent resilience in our pet care model and the underlying pet care market.” In a world of infuriatingly low visibility, spending on pets seems one of the more certain bets for the foreseeable future.
Compare and contrast with Cineworld, the operator of movie theaters, whose latest update only illustrates what happens if your very business depends on bringing people together to sample the thrill of shared experiences.
Cineworld (LON:CINE) shares fell 13% to their lowest since early August, after the company warned that it is likely to breach its debt covenants by the end of the year, and unlikely to bring debt back within the agreed levels by the end of 2021. It warned that it needs its remaining U.S. cinemas to reopen as planned by the end of October, and to avoid any further delays to major film releases, or else it will need fresh liquidity to continue as a going concern.