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2 Picks for Pets

Del Monte Foods and Colgate-Palmolive have signaled something that most investors probably didn’t notice, Cramer said Friday: a bull market in the pet businesses.

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Del Monte delivered a better-than-expected quarter thanks in no small part to Meow Mix, Milk Bones, Kibbles ‘n Bits and Snausages, which have been taking share and experiencing what Cramer called “strong brand momentum in the pet chow category.” At the same time, Colgate over the past two years has been able to boost prices for its pet food 11% in 2008 and 9% in 2009.

Let’s face it – household pets are about as beloved as children these days, and pet owners across the board are willing to shell out big bucks to keep their companion animals happy. According to the American Pet Products Manufacturers Association, US pet industry expenditures jumped $2.3 billion to $45.5 billion in 2009 from the year before. And the number should reach $47.7 billion in 2010, the group said.

Cramer recommended playing the growth, but not with DLM or CL. He’d rather see investors buy pure plays like Petsmart , America’s largest pet-food retailer, or PetMed Express , the leading online pet pharmacy. Both stocks may be flirting with their 52-week highs, but they are still very cheap.

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CL
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