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Here’s why Greencross Limited is a great buy today

TPG Star yesterday completed its ‘sell-down’ to institutional investors of its 16.6% stake in Greencross Limited (ASX: GXL), which saw the stock trading as low as $9.63 during the day. The sale was made at a price of $9.75 which represented a 2.5% discount compared to its previous closing price.

While the shares entered a trading halt on Friday to let the market absorb the information in an orderly fashion, the sell-down will actually benefit shareholders going forward. By releasing such a large portion of shares from one body, the stock’s liquidity will be improved while its weighting in the S&P/ASX 200 (INDEXASX: XJO) will also be increased.

Today, the shares have recovered 34 cents or 3.5% and are once again trading above the $10 level at $10.09. Although they may not appear cheap on a P/E multiple of 29.5, the price seems justifiable given the company’s strong growth prospects in a rapidly expanding industry. While Greencross currently controls 7.5% of the Australian pet industry, it is striving for a 20% market share over the coming years.

Understandably however, some investors might be deterred by the stock’s lofty valuation. The Motley Fool’s top analysts have uncovered another fast growing ASX company that is trading on a far more attractive valuation which offers a fat, fully franked dividend yield.

To get the name, code and all the details of this ultra-promising stock, simply click here now. You'll receive our valuable report titled "The Motley Fool's Top Stock for 2014." - it's 100% FREE!

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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