PETM's great buying opportunity
In our view, the current investors' disappointment and confusion about the poor after-market performance of the recent Pets.com's (IPET) IPO has created an excellent buying opportunity for PetsMart.com (PETM).
PETsMART.com (PETM @$3 3/4) is the Internet's premier destination for pet supplies and pet care needs and the most popular online pet site according to Media Matrix, PC Data and Nielsen's Net Ratings. PETsMART.com offers the largest product selection, excellent customer value, superior service, and compelling content.
PETsMART.com, Inc., founded in May 1999, is the brain child between PETsMART Inc., a privately held company based in Pasadena, CA. and Idealab!, the nation's leading Internet incubator of such companies as eToys and GoTo.com. Other investors include Idealab Capital Partners and Global Retail Partners. To avoid the often overly-expensive investment banking fees and hype of an IPO, PETM is created through the process of a reverse merger -- merging a privately held company into a Nasdaq listed public shell company.
The pet products industry in the United States is a large and growing market characterized by a loyal and action-driven customer base. According to the PetIndustry Joint Advisory Council, U.S. consumer spending on pet products and services grew at an annual rate of approximately 9% per year between 1993 and 1997, totaling approximately $23 billion at the end of 1997. Today, more than 60% of U.S. households own a pet and 40% of those households own more than one pet, according to a recent American Pet Products Manufacturers Association study.
Late last year PETM announced the acquisition of AcmePet.com, the largest online pet oriented community, which adds over 800,000 page views per month to PETM's web
site.
PETM's earnings per share estimates are $.35 for 1999 and $.50 for year 2000. The current combined p/s and p/b ratio is 1.56, unusually low for a niche-market internet player. Insiders have been aggressively buying the stock recently between $3 to $4.60 per share. I strongly recommend the purchase of PETM with a price target of $10 per share in 6-12 months.
pcyhuang
huangcapital.com |
