IDEXX Labs demonstrates there's rarely a recession in pet care

Analysts expect 10-15% revenue growth in FY 2008 after a 24% increase in FY 2007. Costs are moderate, and margins should remain adequate.

Further, although roughly 70% of IDXX's business is U.S.-based, which typically would represent a concern, given the likely U.S. economic slowdown, it's not as relevant here. The reason? Pet health care spending is remarkably resilient in the U.S., with Americans demonstrating a willingness to sacrifice much to care for these adored, extended members of the family. The Reuters FY 2007/FY 2008 EPS consensus estimates for IDXX are $1.57 to $1.86.

The risks? Analysts are keeping an eye on IDXX's research and development costs, and on intensifying competition in the sector.

Stock Analysis: IDEXX Labs is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from IDXX's shares. Sell/Stop Loss if you were to purchase shares in this company: $38.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.