PetSmart

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

$7 billion pet product retailer PetSmart ( PETM) is another Rocket Stock that's made our list this week. The firm boasts a footprint of 1,250 big-box stores spread across the country, selling products like pet food, supplies, and toys as well as smaller pets and services like grooming or training. But the best thing about PetSmart is the fact that more than half of its sales come from consumables.

Because such a big part of PetSmart's product mix is driven by consumables, the firm boasts big recurring revenues as consumers replenish their supplies of pet food and treats. While other major retailers all stock pet products, they can't match the sheer scale of offerings at a store like PetSmart, or the expertise of the associates who work there. That's what keeps customers coming back -- and what keeps margins and cash generation higher than most non-specialized retail firms.

>>20 Smaller Stocks With Growing Dividends

Another major trend in PETM's favor has been the increase in how much Americans are willing to spend on their pets. Consumers have gone from treating pets like animals decades ago to treating them much more like humans today -- and spending on pets has doubled since ten years ago as a result.

If you liked this article you might like

With Eyes on Solar Eclipse, Wall Street Stumbles Yet Again

Unilever Bankers Said to Be Pushing for Colgate-Palmolive Takeover