January sales: picking up the bargain shares
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We have exciting news in the West household: we’re adopting a rescue dog! We don’t actually know when he’ll be able to travel from Bahrain given the current situation, but we’re hopeful it will be sometime in June. Luckily, it gives me plenty of time to shop and stock up on new goodies instead of simply giving him the hand-me-downs from his soon-to-be big sister (our current dog).
Dogs are expensive. I’m not going to lie, and anyone who tells you otherwise is doing just that. A rough estimate puts our current dog’s annual cost at £2,000. Multiply that over the span of her 10+ year life expectancy, and a little extra for senior care and one-off vet services, and you’re looking at close to £30,000. This means a dog is not only a serious time commitment, but a financial one as well. So, there has to be a way to recoup some of this money through my investments, right?
‘A dog is the only thing on Earth that loves you more than he loves himself.’ — Josh Billings, writer and lecturer
Healthcare is undoubtedly a big theme in the human world at the moment, and it’s the same for our pets. I pay thousands a year in medication to keep my dog’s hypothyroidism under control and I don’t bat an eye. Her particular mediation is produced by Dechra Pharmaceuticals, a holding in both Marlborough Multi-Cap Growth* and TB Amati UK Smaller Companies**. Dechra develops and manufactures high quality products exclusively for veterinarians, including the antibiotics used to treat and stop the spread of infections in cows on dairy farms.
With increased healthcare comes insurance to cover it all – available from large providers such as Tesco Bank and Direct Line, but also more specialist names such as PetPlan. Part of the Allianz Insurance brand and a holding in T. Rowe Price Continental European Equity***, PetPlan insures over 1.3 million pets and is one of the most popular insurance companies in the UK.
The desire to keep our pets healthier and to live longer means higher-quality pet food is increasingly popular. Surprisingly, a number of pet food brands are privately owned but there are large corporations which also tap into this area. For example, Hill’s Pet Nutrition, a popular prescription food, is a subsidiary of Colgate-Palmolive. And Nestle, a holding in Janus Henderson European Focus**, owns a number of pet brands including Purina and Fancy Feast.
If you know me, then you’ll know I’m a crazy dog person and passionate about adoption. But what’s really fascinating to me is the idea that this multi-billion-pound pet industry is centered around the conflict between the desire to treat pets as humans, versus the desire to allow them to live as nature intended – versus what’s convenient for us owners.
Even when discretionary spending is cut, you’re still going to buy your dog food and you’re still going to take them to the vet when they’re sick. You might change the brand of food, opt for a more affordable kibble over a raw diet, but the underlying spending will still be there. And if you don’t believe me, I’ll simply point you in the direction of a Mintel study from 2018 which found that 54%^ of millennials would prefer to cut back spending on themselves than their pet!
*Source: fund factsheet, 1 May 2020
**Source: fund factsheet, 30 April 2020
***Source: FE Analytics, full holdings at 31 March 2020
^Source: Mintel, 16 October 2018