Pet ownership is a booming trend that has created tremendous opportunities for Wall Street and retail investors. Approximately 66% of U.S. households own a pet, and companies like Petco Health and Wellness Co. Inc. (NASDAQ: WOOF) can reward shareholders. Petco sells various pet supplies and other products that help pet owners. Buying a share of Petco stock gives you exposure to the pet industry, and it is a relatively straightforward process if you’re a new investor. This guide will explore how to get started and add Petco shares to your investing portfolio.
How to Buy Petco (WOOF) Stock
Want to get started with Petco stock? You can follow these steps to buy WOOF.
Pick a Brokerage
The first thing you’ll need to do when you want to buy or sell a share of stock is create a brokerage account. A brokerage account is an account provided to you by a financial service provider called a broker. Brokerage accounts let you buy and sell many stocks, exchange-traded funds (ETFs) and other securities. Your broker carries out your orders, sometimes in exchange for a fee. If you don’t already have a brokerage account, you will have to shop around and determine which account makes the most sense for you. Here are a few factors you might want to consider when you start your search for the right option.
- Account maintenance fees and commissions: Though not every broker charges account maintenance fees or commissions on trades, even small charges can quickly add up for active traders. Check your broker’s fee and commission schedule before you open an account so you aren’t surprised by sudden fees.
- Educational tools: If you’re still learning how to buy stocks, it’s a good idea to look for a broker that offers stock education tools you can use to practice trading or learn more before you enter the market. Just a few days of research can mean hundreds of dollars saved when you’re able to avoid common trading mistakes. Some brokerage accounts also include access to responses like stock screener filters and analyst recommendations.
- Mobile trading access: Are you the type of person who loves to get everything done on your phone or tablet? If so, be sure to look for a broker that has taken steps to optimize its mobile platform for users on the go.
Building Your Petco Stock Position
When your account is open and fully funded, you can decide how many shares of WOOF you want to buy. Investors should assess their portfolio goals and the current stock price among other factors before buying Petco stock.
You might want to take some time to study how the price of the stock is changing before you buy to maximize the number of shares you can get. Don’t feel pressured to take an oversized position in a stock. You can always start with a single share and add more later on.
Choose Your Order Type
When you want to buy or sell stock, you’ll do so by placing a buy order through your broker. There are multiple types of buy orders, and your broker might provide you with access to many order types you can use to control how much you pay per share.
Some common types of orders you might see in your brokerage account include:
- Market order: A market order is executed at the current market price the share is trading at. For example, Petco is trading at $4 per share, you'll pay around $4 for each share you buy. The market price may move up or down before your broker can fill your order depending on current market conditions.
- Limit order: A limit order is executed at or below a price you specify to your broker. For example, imagine that Petco shares are trading at $4 per share, but you think the price will fall. You could place a limit order to buy one share at a limit price of $3.50. If the price of WOOF falls to $3.50, your broker will fill the order. If the trading day closes and the price of WOOF is still above $3.50 per share, your broker will not fill the order. Limit orders give you more control over the price you pay for each share, but they aren’t filled as quickly as market orders.
Depending on the broker you work with, you may also have the flexibility to place stop orders, trailing stop orders, stop-limit orders and other types of stock orders.
Execute Your Trade
Always double-check the details of your order before you submit it to your broker. Depending on the type of order you’re placing, the order might be filled very quickly — and you might not have time to adjust or cancel the order before it’s filled. From here, your broker is responsible for filling the order. If the broker can buy the shares of WOOF at the price specified (if you’re placing a limit order), the broker will typically notify you via email or push notification when it’s done so. If your broker cannot fill the order, it may leave it open or close it at the end of the trading day. You can usually select which of these two options you'd like when placing the order. You can also use your brokerage account settings to change your preferences.
Best Online Brokers
Still not sure where you want to open an account? Consider a few of the best brokers Benzinga works with using the chart below.
Petco Stock History
Petco is an American pet supply company offering pet products, grooming and spa services as well as the sale of select types of live animals. Founded in 1965 as a mail-order veterinary supply company, Petco is one of the longest-standing animal supply stores in the United States.
Petco operates more than 1,500 retail stores throughout the United States, Mexico and Puerto Rico as well as 200 veterinary clinics.
Petco’s stock has dropped since its most recent IPO, but sentiment remains high among investors.
Petco has had three rounds of initial public offerings (IPOs), the first of which launched in 1994. It became a public company in 2002 and 2021 after going private in 2000 and 2006. During the company’s most recent IPO in January 2021, shares soared more than 63% to hit a high of $31.08 per share. The company’s online operations and essential pet services helped the company during the pandemic.
Investors who bought shares at the IPO face an uphill battle to break even. Lower profit margins and other factors have turned Petco into a penny stock. The pet retailer can still recover because pet adoptions and the need for pet supplies remain strong. Interest rate hikes and declining consumer spending can hurt the broad economy. There are enough cat and dog lovers to generate plenty of revenue for the company.
Pros of Buying Petco Stock
Advantages of buying Petco Stock Include:
- Changes from the pandemic: Pet ownership has boomed since the onset of the COVID-19 pandemic when Americans adopted more pets to help with quarantine loneliness. Shelter Animals Count, a research company and database that tracks shelter adoptions, said that adoption rates rose 15% in 2020 when compared to adoption rates in 2019.
- Low P/E ratio: A 30 price-to-earnings (P/E) ratio and a 12 forward P/E ratio make the company’s valuation look enticing.
- Long-standing trends: American pet ownership and spending have been growing since long before the pandemic. These continued trends suggest Petco stock can recover.
Cons of Buying Petco Stock
Petco has several perks, but keep these cons in mind when assessing WOOF stock:
- Increased competition: Online-only retailers like Chewy Inc. (NYSE: CHWY) and Freshpet Inc. (NASDAQ: FRPT) are competing for Petco’s market share.
- High debt: Petco has significant debt, and rising interest rates won’t make matters better. The company has to pay down some of its debt to look like a more enticing stock pick.
Diversify Your Portfolio with Petco Stock
Petco gives investors exposure to the pet industry. The stock has endured many challenges since its recent IPO. Some investors may view WOOF stock as a buy-the-dip opportunity. A lower stock price increases an investor’s margin of safety, but it is important to look at financials to see whether stock drops are justified. If you decide to invest in Petco, be sure to use the stock as a complement to an otherwise fully diversified portfolio to protect yourself against sector downturns.
Frequently Asked Questions
Why is Petco stock down?
Petco stock is down for various reasons, including reduced guidance, high debt, macroeconomic concerns and other factors.
Is Petco a buy or sell?
Petco hasn’t been the best investment so far in 2023 and has lost more than half of its value year to date. The company’s financials don’t look good at the moment, but long-term investors have more time to wait for a recovery.
Does Petco pay a dividend?
Petco currently does not pay a dividend to its shareholders.