The pet food industry has the advantage of being nearly recession-proof, as Americans are very reluctant to cut back on taking good care of their pets. Revenues from pet food sales, more than $22 billion annually, are at the top of the list in pet care products, bringing in more than pet veterinary care or other pet services and supplies. Spending on pet food has increased substantially with the rise in popularity of premium brands, and pet food stocks were performing well in 2016.

Options for Pet Food Stocks

Unfortunately for investors, the top five pet food companies in terms of annual revenues are all either privately held companies or subsidiaries of much larger companies, such as Purina PetCare, which is a subsidiary of the food and beverage industry giant, Nestle SA (OTC: NSRGY). However, a handful of hot stocks still were available among the world's top-selling pet food companies for investors to consider in 2016.

Blue Buffalo Pet Products Inc.

Founded in 2002, Blue Buffalo Pet Products Inc. (NASDAQ: BUFF) has quickly risen to the top 10 among pet food companies. The company develops, produces and markets pet food in North America, Mexico, and Japan through several lines, such as the BLUE Life Protection Formula, BLUE Basics and BLUE Natural Veterinary Diet. It also markets cat litter. Blue Buffalo markets its products through a large variety of distribution channels, including national and regional pet food chain stores, online and through veterinary clinics and pet hospitals.

With a market capitalization of $5.1 billion, Blue Buffalo stock was trading around $26 a share in August 2016, up 39% year to date (YTD). The consensus analyst target price was $28.50 a share. Deutsche Bank AG (NYSE: DB) analysts pegged the stock even higher, at $30 a share, and the company had revised its own growth outlook upward. Blue Buffalo had an impressive three-year average revenue growth rate of 25%, and its return on equity (ROE) was an astronomical 424%.

Unicharm Corporation

Japanese company Unicharm Corporation ADR (OTC: UNICY) produces and markets a lot more than pet food and pet care products globally, selling general health care and home care products, baby and child care products, and feminine hygiene products. Nonetheless, the company ranks among the top 10 pet food companies as measured by its annual pet food revenues of more than $700 million.

Unicharm Corporation had a market cap value of $13.7 billion. As of August 2016, its stock was trading at $4.60 a share, up 13% YTD. The stock's five-year average annualized return was 9%. The company's three-year average revenue growth was 16%. Unicharm had an attractively low debt-to-equity (D/E) ratio of just 0.2 against an industry average of 0.7.

Spectrum Brands Holdings Inc.

Spectrum Brands Holdings Inc. (NYSE: SPB) is also a manufacturer and worldwide retail seller of a wide variety of consumer products in addition to pet food. The company operates through five business segments. The global pet supplies segment produces and sells foods for dogs, cats, and small animals. This segment also produces pet cleanup products, aids for pet training and pet accessories such as collars, leashes, and beds. The company markets health and grooming products for pets and has a subsegment responsible for producing aquariums and supplies for aquatic pets. Spectrum Brand’s other business segments are home and garden, global auto care, global batteries and appliances, and hardware and home improvement.

Spectrum Brands had a market capitalization of $7.7 billion and offered investors a dividend yield of 1.13%. The company's stock price was up 29% YTD, trading at $130 a share as of August 2016. The five-year average annualized return was an impressive 39.06%. Spectrum Brand's three-year average revenue growth was 13%, and its three-year average net income growth was even higher at 45%.