The Kogan.com Ltd (ASX: KGN) share price has continued its strong run on Monday, climbing 11% higher to reach a new all-time high of $5.50 in morning trade.
This means the e-commerce company's shares have now gained a remarkable 300% year-to-date.
What happened?
Fresh on the heels of announcing plans to launch a health insurance offering with Medibank Private Ltd (ASX: MPL) last week, this morning Kogan advised that it has entered into an agreement with PetSure to offer a range of pet insurance products under a new Kogan Pet Insurance brand.
As with the Medibank deal, Kogan will earn a commission on each pet insurance policy issued. After which, the insurance will be administered by PetSure and underwritten by its parent The Hollard Insurance Company.
Management believes this is a natural extension to its existing insurance offerings and is excited to offer an affordable range of pet insurance products in a fast-growing category. It expects to launch the products in the second-half of FY 2018.
What now?
I think this is another smart move by management and a great way to further diversify its business. Furthermore, it does give it the potential to cross-sell pet care products to insurance customers and vice versa.
But as promising as its recent developments have been, I'm not ready to invest just yet.
Following its strong gain today, Kogan's shares are now changing hands at a lofty 150x trailing earnings, which is a little too expensive for my liking.
But, admittedly, if it can expand its margins considerably this year then this multiple would come down to more manageable levels very quickly.
For now though, I intend to wait to see if that proves to be the case and will consider other retail investments such as Super Retail Group Ltd (ASX: SUL) and Accent Group Ltd (ASX: AX1) in the meantime.
