VCA Antech Inc. (NASDAQ:WOOF) might not easily ring a bell to stocks and options traders. However, if you have cats, dogs or other pets or even if you know people who keep pets, VCA Antech is definitely not a stranger to you. VCA Inc. with its modest market capitalization of $4.50B is a national animal healthcare company operating in the United States and Canada.
The Company operates in two segments: animal hospital and laboratory. The Company provides veterinary services and diagnostic testing to support veterinary care and it sells diagnostic imaging equipment and other medical technology products and related services to the veterinary market.
Why Are We Looking at VCA Today?
Shares of VCA caught my attention yesterday after the stock made a new 52-Week high to $54.77. Shares of VCA have been recording an impressive bullish rally lately such that it has recorded 8 new highs in the last one month. The stock has gained 74.85% in the last one year, it has gained 33.08% in the last six months and it has gained 11.01% in the year-to-date period. Therefore, the impressive gains recorded in the shares of VCA encourage more diligence into the prospects of the company.
The chart above shows how the shares of VCA have traded in the last one year. You will observe that the stock has been obstinately northbound as shown by the green arrow. You’ll also observe that it currently trades above its 50 and 200-day moving averages. More exciting is the stock’s RSI of 61.55, which suggests that the buying action on the stock is still vibrant.
Interestingly, the stock’s fundamentals also support the bullish momentum. For instance, the company’s revenue is expected to grow by 9.10% this year and by 6.60% next year. VCA’s earnings are expected to rise by 18.50% this year, 12.50% next year before it continues at a compound annual rate of 14.00% over the next five years.
Optimistic Business Outlook
The real reason I am optimistic about the prospects of VCA Antech is its huge market share in the veterinary services industry. The company currently controls a market share of 5.5% to more than triple the market share of its closest rival, IDEXX Laboratories at 1.8%. In fact, VCA has more than 43,000 facilities as at the end of 2014.
It might interest you to know that VCA Antech operates in a high-growth industry where the total number of pets are expected to increase by an annual rate of 2.1% through 2019. In fact, it is expected the industry revenue will increase by 4.5% over the next five years to $42.2B. Now, an increase in number of people keeping pets and the rising need for pet insurance provides a fertile ground from which VCA Antech can grow its business.
Pet insurance will mandate pet owners to shell out money in paying insurance premiums; hence, pet owners will be more inclined to approve expensive procedures for their pets since the insurance company will be footing the bill and they won’t have to cover the pet insurance cost. The company’s impressive prospects is evident in its last reported quarterly report in which it reported earnings of $0.37 in line with analyst estimates while it delivered impressive revenue of $479.93M to beat the consensus by $50.06M and to mark a 10.2% year-over-year increase.
How to Trade WOOF Options
I am optimistic about the prospects of VCA Antech in 2015 and I strongly believe that the stock can breakout about $55 after the release of its first quarter (Q1 2015) earnings in April. I recommend buying the WOOF Jun 2015 55.000 call (WOOF150619C00055000) at an asking price of $2.54.
— Daily Option Alerts