A lot of people got new pets during Covid lockdowns. Pet ownership has been an increasing trend for years. People consider pets as part of the family and are thus willing to spend a lot of money on food and health products.

$ZTS and $IDXX are two quality companies in the animal health sector. Both businesses are highly profitable with great balance sheets, manageable debt, high margins and are long-term market outperformers.

At the moment, both are still overvalued for my taste. The reason might be that there simply aren’t that many quality pure plays focusing on companion animal health. Additionally, IDEXX is at a $30B market cap, which makes it a potential takeover target, thus trading at a premium. Still, two worthy members of my selection of quality companies.