What are people still doing? They are still going to the dentist. That's what the soaring stock of Henry Schein (HSIC) is saying. They are still taking care of their pets. That's what the incredibly strong stock of Zoetis (ZTS) is saying. They are still playing video games, that's what the rocketing stock of Electronic Arts (EA) is saying. They are still going to the supermarket to buy food to cook at home, and that's reflected in the boost of the stock of supermarket giant Kroger (KR) .
We've hit these big themes before and it's always terrific to see them stay intact during these turbulent times. We've learned early on in life to take care of our teeth, and that's been something that doesn't ever go away whether it's with solid and growing toothpaste sales from Colgate (CL) and Procter & Gamble (PG) or the dental equipment sales from Henry Schein, which forecast an astounding 17% to 19% earnings per share growth for next year, preposterously good in this environment. It's not all done with smoke and mirrors, as sales growth increased by 5.1% with 3.9% organic growth. Remember, the latter is the kind of growth we like.
We shower our pets with love. It's called the "humanization of pets" theme and few companies have taken advantage of it like Zoetis, the animal health care spinoff of Pfizer (PFE) that introduced the revolutionary Apoquel this quarter, which stops dogs from itching almost immediately. For those of us with dogs, and we have two rescue dogs, this is a godsend. Right now we have to put the fabled Elizabethan collar on their necks -- kind of like jamming a lampshade on their heads -- so we'd pay anything from Apoquel. Judging from early sales, we're not alone.
By the way, Henry Schein sells equipment to vets and that business grew by 10% in North America, furthering the thesis.
Electronic Arts delivered a terrific number last night, much to the chagrin of those who sold the stock down 5% when the headlines printed. They didn't wait to hear that the company's quite certain that Star Wars Galaxy, Battlefield 1 and Titanfall 2 -- which analysts are concerned about flagging -- are going to have a strong holiday season. These video game companies are immensely profitable and they are all part of the stay-at-home thesis we keep articulating. It's important to note that these games are all digital downloads, they aren't being bought at GameStop (GME) . In fact, GameStop reported a horrendous same-store forecast this morning, down 6.5% to 9.5% when we were expecting down 1.5% to 4.5%. Abysmal.
Finally, Kroger confirmed its annual earnings guidance today and shaded up -- not down -- next year's numbers. I have been waiting for this moment because it confirms something we talked about recently when it comes to McCormick (MKC) , the spice company. Whether it be because of cost, or because of fear, or because of a desire to nest, people just aren't going out to dinner as much as they used to. We know that from the restaurants, almost all of which have reported disappointing numbers.
Now we know it from the other side, from Kroger, and the stock is dirt cheap after being hammered relentlessly forever because of a not-so-hot acquisition and a lot of food deflation. Maybe that's past. One thing that's certain, though, the stay-at-home thesis is one they are, at last, capitalizing on.
Going to the dentist, the humanization of pets, the addiction to video games, the stay-at-home for dinner theses, all, in turbulent times, theses that have held up during this earnings season.
