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On Jul 15, 2013, shares of PetSmart Inc. (PETM - Snapshot Report) recorded a new 52-week high of $72.98. At the end of the trading session, the stock closed at $72.51, up approximately 5% year to date.

The current price is 2.3% below the Zacks Consensus average price target of $74.23, signifying further upside potential. Moreover, the stock is currently trading at a forward P/E of 18.3x, a 21% discount to the peer group average of 23.1x. The long-term EPS growth rate stands strong at 16%.

A favorable industry outlook, healthy sales trend, operating efficiencies and an upbeat guidance are driving the stock higher. PetSmart is a leader in the pet space, and continues to occupy a dominant position in the pet market over its peers.

PetSmart is focused on building its brand image and is continuously emphasizing on its merchandise assortments to drive higher sales. We remain constructive on the fundamentals of the company and believe that the differentiated merchandise and services position it well to gain market share in the long run.

The company came up with better-than-expected first-quarter fiscal 2013 earnings. The quarterly earnings of 98 cents a share surpassed the Zacks Consensus Estimate by a couple of cents and jumped 15.3% year over year.

Following the strong results, the company raised its earnings guidance and now projects earnings in the range of $3.82 – $3.94 per share for fiscal 2013, up from its earlier guidance range of $3.76 – $3.92. Moreover, the company expects second-quarter fiscal 2013 earnings between 82 cents and 86 cents.

PetSmart’s operating income remains strong, as evident from the 8.5% growth to $167.5 million during the last reported quarter. Alongside, operating margin expanded approximately 30 basis points to 9.8%.

Currently, PetSmart holds a favorable Zacks Rank #2 (Buy).

Other Stocks to Consider

Besides PetSmart, other stocks in the retail/wholesale sector worth considering include Big 5 Sporting Goods Corp. (BGFV - Analyst Report), Wolverine World Wide Inc. (WWW - Snapshot Report) and Brown Shoe Co. Inc. (BWS - Snapshot Report), all holding a Zacks Rank #1 (Strong Buy).

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