Given the soft outlook for the Australian economy over the year ahead it may be worth looking to stocks with potential to grow profits via acquisitive growth strategies.
Yesterday, I wrote an article outlining the basic business model of roll-up businesses and suggested three that are worth looking at. Today, I have three more companies to consider given their track records and outlook for success.
Corporate Travel Management Ltd (ASX: CTD) $11.99, up 23% in 2015
The travel arranger is soon to join the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) thanks to phenomenal success growing organically and acquisitively.
The acquisitive success a demonstration of how geographic scale brings strategic windfalls to a travel business looking to integrate its operations worldwide. The business already has a significant presence in Australia, Asia and North America, with Europe the last piece in the global puzzle.
In 2015 Corporate Travel Management acquired a UK-based travel management group, which is reportedly already winning new business. The company has been successful as it is able to improve acquired operations through its superior technology and sales strategies. Its solutions are also evidently simple to sell, which means it seems reasonable to expect it to keep growing at a decent rate in the years ahead.
1300 Smiles Limited (ASX: ONT) $6.75, up 12.1% in 2015
This dental clinic aggregator just increased its interim net profit and dividend by 33% and 38.5% respectively. Notably, it has delivered compound annual share price growth of 22.5% since listing at 80 cents per share in 2005.
Its founder, major shareholder and chief executive, Dr. Darryl Holmes, is ambitious and the business still has a long growth runway ahead of it. The founder now has 10 years' experience in running a public company and aggregating dental clinics, so who's to say he won't deliver another successful 10 years ahead.
Capitol Health Ltd (ASX: CAJ) $1, up 17.6% in 2015
This diagnostic imaging services business hit a record high this morning and has climbed 2,281% over the last five years. It's in the business of buying up radiology businesses and is only now beginning to expand outside of its Victorian circle of operations.
Radiology is a critical service to the Australian healthcare industry, enjoys generous government funding and with an ageing population is likely to grow quicker than GDP.
All three of these businesses look decent prospects and may well go onto demolish the market's returns in the years ahead.
