I often refer to keeping a margin of safety and keeping an eye on historical metrics as well as a forward outlook. PETS is a perfect example.
Private equity is big on the vet business. Why? Pet owners will pay up significantly to take care of their "extended" families. PETS provides medications for all kinds of animals and they are doing so in a financially prudent manner.
I own PETS at ~13/share. With earnings being $1.49, the purchase price PE is a reasonable 9 with a dividend yield of 5.9%, the margin of safety is relatively strong.
Some of the positive points of PETS is that they carry no LT debt, their operating and net margins have been growing over 5 years, and return on capital is in the mid 20's.
As always, there is the Amazon factor. Just like Walmart, Amazon is going into lots of markets. But, like most military confrontations over history, an army can spread themselves out too thin fighting on too many fronts. Business is no different.
