Should You Consider Adding Zoetis (ZTS) to Your Portfolio?

Diamond Hill Capital, an investment management company, released its “Select Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets continued their YTD rally in the third quarter, with the Russell 3000 Index surging 8%. At the same time, the portfolio underperformed the Russell 3000 Index, returning 4.98%. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its third-quarter 2025 investor letter, Diamond Hill Select Fund highlighted stocks such as Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE: ZTS) is involved in the research, development, manufacturing, and sale of animal health medications, vaccines, and diagnostic products and services. The one-month return of Zoetis Inc. (NYSE:ZTS) was -1.74%, and its shares lost 19.49% of their value over the last 52 weeks. On October 29, 2025, Zoetis Inc. (NYSE:ZTS) stock closed at $143.94 per share, with a market capitalization of $63.792 billion.

Diamond Hill Select Fund stated the following regarding Zoetis Inc. (NYSE:ZTS) in its third quarter 2025 investor letter:

"Though markets have continued rising throughout the year, we have continued finding individual companies whose prices we believe are not reflective of their long-term growth outlooks. Accordingly, we initiated four new positions in Q3, including Colgate-Palmolive, Berkshire Hathaway, Zoetis Inc. (NYSE:ZTS) and Adobe.

Zoetis is a leader in the animal health market with leading products for companion animals (pets) and livestock. The company has a broad portfolio with multiple growth drivers and a strong pipeline to address several undertreated pet conditions. Concerns about one of its arthritis drugs used in dogs have pressured the share price recently, allowing us to introduce a position below our estimate of intrinsic value."

Zoetis Inc. (NYSE:ZTS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the second quarter, which was 74 in the previous quarter. In the second quarter of 2025, Zoetis Inc. (NYSE:ZTS) reported $2.5 billion in revenue growing 4% on a reported basis and 8% on an organic operational basis. While we acknowledge the potential of Zoetis Inc. (NYSE:ZTS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Zoetis Inc. (NYSE:ZTS) and shared the list of most profitable dividend stocks to invest in. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.