PetMed Express, Inc. (NASDAQ:PETS)

PetMed Express Inc. (PETS) is the parent company of 1-800-PetMeds, an internet pharmacy that sells medications and other healthcare items for cats, dogs and horses.

Customers can purchase everything from standard flea and tick treatments to vitamins and nutritional supplements — all the way up to prescription drugs for thyroid problems, diabetes and other ailments.

Considering that Americans spend more than $72.5 billion on their pets each year, PETS is clearly operating in a very lucrative area of the economy.

And today it is more difficult (and potentially risky) for pet owners to visit their local vet or pet supply store. So PETS can easily capture market share through its website as well as its call center.

Over the last 12 months, PETS generated $1.41 per share in earnings.

But with the coronavirus crisis causing more pet owners to order supplies online, PETS’ profit is expected to jump as high as $1.88 per share next year.

That’s a 33% increase in an already lucrative business… the kind of growth that will certainly show up on the radar of companies looking to grab a bigger piece of the pet care market.

In fact, one may already be sniffing around…

The Biggest E-Commerce Titan Could Quickly Expand Its Reach

This week, option Indicators lit up for shares of PETS.

As you know, unusually high option activity is an indications that a deal may be in the works,

It would make perfect sense for a big e-commerce retailer like Amazon.com (AMZN) to buy out PETS.

The acquisition would give AMZN another avenue for tapping into the lucrative $72.5 billion market for pet supplies.

Even better, since PETS already has a network of physicians, distributors and products — not to mention customers’ trust — it would essentially be a turnkey way for AMZN to jump deeper into this market.

Best of all, PETS is currently worth about $635 million market cap — just a fraction of the more than $40 billion in cash Amazon currently holds.

In fact, I’d expect AMZN to offer PETS shareholders a very nice price… as much as $52 for every outstanding share.

Growing revenues at 20% earning were even higher but that High 47% may not be sustainable.