Mar. 17, 2009 (Investor's Business Daily) -- There are 88 million cats and 75 million dogs in U.S. households, and their owners spend $43 billion a year keeping them healthy and fed.

So businesses that are successfully part of that ought to have a pretty steady income. Enter PetMed Express (PETS), which operates in a niche of the pet industry. It sells pet medicine, both prescription and over the counter, on the Internet and via a toll-free number under the brand name 1-800-PetMeds.

This $3.5 billion industry has been dominated by veterinarians, who still dispense 72% of pet drugs. But that's down from 100% a decade ago as online providers have made inroads.

PetMed, founded in 1996, bills itself as America's largest pet pharmacy. It boasts more than 750 products, undercutting vets by 10% to 15%.

In the early days, it modeled itself after Pets.com, an Internet purveyor of all things pets to animal lovers. Both got into trouble during the dot-com bust. But Pets.com went under and PetMed survived.

It gave up trying to sell leashes and catnip and stuck to pet medicine. After losses in 2000 and 2001, it had seven straight years of earnings growth.

In the latest quarter, it earned 21 cents a share, a 17% increase from the year-ago quarter. That's slower growth than in recent quarters. Revenue rose 16%.

Analysts tracked by Thomson Reuters forecast 2009 earnings of 96 cents a share, a 17% increase from the previous year.

For 2010 they're looking for $1.06, a 10% increase. Return on equity was an above-average 33%, profit margin 16.1% for 2008.