Pet ownership in the U.S. has soared nearly 13% since the beginning of the pandemic – sending the demand for pet goods/services up along with pet stocks.

Signs that COVID is dragging on for too long: Those companions you bought to keep you company, are about to celebrate their first birthdays.

Millennials made the pet industry explode

In 2020, more than half of new pet purchases in the UK and US were purchased by those under the age of 34. The increased demand for pets sent the price of dogs up 70% along with pet stocks. Since the start of 2020…

• Chewy (CHWY
  ), an online pet product retailer, is up 179%
• Trupanion (TRUP
  ), a pet insurance provider, is up 130%

The U.S. pet product industry is expected to grow to $110b this year while the global pet care business is expected to grow around 6%/year until 2025.

Is there long-term potential or is this just puppy love?

While pet adoption rates have returned to pre-pandemic levels, Richard Buxton, a fund manager at Jupiter Asset Management via FT, gives reasons why the demand for pet goods could stay:

• Working from home is a trend that should long outlast the pandemic, making it easier to own pets.
• Pet ownership tends to persist as new pet owners tend to become repeated pet owners.

But stocks that have shot up too fast could fail to meet growth expectations — and those that have benefited from stronger online sales (i.e. Chewy), have more to lose.

As e-commerce continues to grow in popularity, online pet stocks may find themselves in a catfight with brick-and-mortar competitors as sales return to physical stores.

For pet lovers… There’s an ETF and more pet stocks for you

ProShare Pet Care ETFPAWZ

— which is up 75% since the start of 2002 — invests in a basket of companies that benefits from the growth of pet ownership — i.e. pet goods, care and services companies.

Emerging pet startups are also taking advantage of the newfound love for pets by going public:

• Rover, an online pet service marketplace valued at $1.35b, is going public via SPAC, Nebula Caravel Acquisition CorpNEBC
  .
• BarkBox, which offers a monthly subscription service for dogs, is going public via SPAC, Northern Star Acquisition CorpSTIC

If the market were to lose its affection for pets, the entire industry could be impacted. But beware, less developed companies like Rover and BarkBox could see the biggest impact and unlike cats, investors don’t often have 9 lives.