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Is the National Veterinary Care Ltd share price about to pop?

The National Veterinary Care Ltd (ASX: NVL) share price will be one to watch after the veterinary company announced that it has entered into an agreement to acquire one veterinary clinic and is finalising terms for the acquisition of another clinic.

Furthermore, the company is in due diligence and contract negotiations for the acquisition of another two clinics located in existing clinic clusters.

Subject to the completion of due diligence and the finalisation of acquisition agreements, management expects the acquisitions to complete between July 1 and August 31.

What impact will this have on its business?

According to the release, the clinics have an aggregate historical annual revenue of approximately $8.5 million and are expected to be accretive to earnings per share in FY 2018.

National Veterinary Care reported half-year revenue of $32.6 million. Annualised this equates to $65.2 million, which means that these new clinics would potentially add an additional 13% to annual revenue at the current run rate.

What’s next?

In order to fund these acquisitions management intends to undertake a placement to institutional, sophisticated, and other professional investors.

No details have been given on expected acquisition costs, nor how much money the company intends to raise through its placement.

Should you invest?

Providing that the company pays a fair price for these acquisitions, I think that National Veterinary Care will continue to be a great investment option.

The company currently operates 55 veterinary clinics throughout Australia and New Zealand. But I expect this number will increase substantially over the next few years as management follows in the footsteps of Greencross Limited (ASX: GXL) and takes advantage of the highly fragmented industry.

This could make it a great buy and hold investment in my opinion.

As well as National Veterinary Care, I think these three shares could be perfect buy and hold investments.

Each has been growing earnings at a strong rate and has shown no signs of slowing.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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