Consumers are estimated to spend a staggering $62.8 billion on pets in 2016, up from $48.4 billion in 2010. Companion pets are particularly popular with the baby boomer generation and young millennial couples, which is resulting in more veterinary spending and a need for animal-related products. Additionally, rising cattle demand in China is likely to increase demand for drugs and diagnostic equipment to improve livestock yields.

The following animal stocks are poised to benefit from increased spending in these niche markets.

Zoetis

Zoetis Inc. (NYSE: ZTS) discovers, develops and manufactures animal health medicines and vaccines, primarily for livestock and companion animals. The company was spun out of Pfizer Inc. (NYSE: PFE) in 2013. Zoetis posted 2016 second quarter revenue of $1.2 billion, beating Wall Street expectations of $1.17 billion. It also raised its guidance for 2016 fiscal year earnings, due to the growth of its cattle business and robust operational revenues. Zoetis has a healthy trailing 12-month operating margin of 19%, strongly outperforming the specialty and generic drug manufacturers' industry average of 3.2%. As of Aug. 15, 2016, the stock had a year-to-date (YTD) return of 9.9% and offered a 0.71% dividend yield. It has a market capitalization of $25.9 billion.

Henry Schein

Henry Schein Inc. (NASDAQ: HSIC), founded in 1932, distributes animal health care products and operates animal health clinics through its two business segments: health care distribution and technology, and value-added services. The company reported 2016 second quarter earnings per share (EPS) of $1.64, beating analysts’ expectations of $1.62 per share. Henry Schein has a debt-to-equity (D/E) ratio of 0.2, which is lower than the medical distribution industry average of 0.9. As of Aug. 15, 2016, the stock was trading at $164.42, toward the top end of its trading range between $126.17 and $183. It had a 2016 YTD return of 3.94% and $13.4 billion market cap.

IDEXX Laboratories

IDEXX Laboratories Inc. (NASDAQ: IDXX) provides diagnostic, detection and information system products for the veterinary, livestock and poultry, dairy, and water testing markets. It had a market cap of $10 billion as of August 2016. The company has raised its revenue and earnings guidance for the past two consecutive quarters through the second quarter of 2016. This is attributed to IDEXX Laboratories moving to direct consumer sales in 2015 and the successful launch of its SediVue urine analyzer product. The company has a solid trailing 12-month operating margin of 18.7%. Investors had been rewarded handsomely with a 53.38% YTD return as of Aug. 15, 2016, which strongly outperformed the S&P 500 Index’s YTD return of 7.15%. It is currently trading at $111.92, only 0.3% below its 52-week high of $112.26.

VCA

VCA Inc. (NASDAQ: WOOF) is engaged in animal health care and operates in the United States and Canada. The company offers pet health information, adoption, and boarding and grooming services. VCA had beaten analysts earning expectations four out of the past five quarters through the second quarter of 2016. The stock has a market cap of $5.9 billion. VCA uses less shareholder debt than its peers to finance its assets, with a D/E ratio of 0.9, compared to the 3.2 medical care industry average. The stock had appreciated 33.44% YTD as of Aug. 15, 2016. It is currently trading at $73.39, just 27 cents below its 52-week high of $73.66.

Petmed Express

Petmed Express Inc. (NASDAQ: PETS) operates as a pet pharmacy. The Pompano Beach, Florida-based company offers prescription and nonprescription medications and nutritional supplements. Investors have been rewarded well, as the stock provided a YTD return of 21.82% as of Aug. 15, 2016. Petmed Express also offers an attractive 3.64% dividend yield, eclipsing the Standard and Poor’s (S&P) 500 Index’s average dividend yield by 1.3%. The company is reasonably valued, with a forward price-earnings (P/E) ratio of 17.8. The stock has a market cap of $417 million.