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It goes without saying that pets such as dogs and cats are treated as extended members of the family in the United States.
Still, the pet care sector has seen its share of volatility, and has not been a preferred sector in these circles. But there are exceptions, and the Central Garden & Pet Company (NASDAQ: CENT) is one.
In general, CENT's management is effectively addressing a challenging retail sales environment (to say the least) via optimizing its supply chain and moving toward higher-margin products. The First Call FY2009/FY2010 EPS estimates for CENT are 76 cents to 88 cents.
Meanwhile, CENT's lawn/garden care business also has been hurt by the protracted housing sector slump, and recent lowered guidance has prompted some Wall Street firms to give up on the stock. The view from here argues that's a bit harsh, under the thesis that the worst is over for the housing sector, and by extension, for lawn/garden care. Hence, the Buy rating, with a moderately tight sell/stop loss.
Stock Analysis: Central Garden & Pet Company is a moderate-risk stock. Consider buying a 25% position in CENT now; then buy another 25% in four months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CENT position before October 2009. Sell/stop loss if you were to buy shares in this company: $6.25.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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