Librarian Capital's Monthly Ranked Top Buys - January 2023 (Part III)

(Substack Exclusive) Portfolio Strategy

This is Part III of this month’s edition, following Part I and Part II earlier this week. All market data is as of 2022 year-end.

We conclude the selection of our 15 best stocks to buy with our last 5 picks:

11.     Zoetis

Zoetis (ZTS US) is our #11 pick. We believe investors can expect a 52% total return (15% annualized) by 2025 year-end from a combination of an Adjusted EPS CAGR of around 11%, a multiple re-rating that adds around 3% to the annual return, and dividends worth around 1% each year.

We rank Zoetis behind the Tech and Payment compounders above because of its comparatively high P/E and lower growth; there are also near-term headwinds related to supply chain disruptions and patent expiries (more below).

Zoetis is the #1 in global animal health pharmaceuticals and also expanding into diagnostics. Revenue growth is largely driven by the Companion Animal segment (about 65% of group sales), which is benefiting from structural growth in pet numbers, rising standards of medical care …