Is Greencross Limited's price fall your opportunity to grab a growth stock?

Greencross Limited (ASX:GXL), one of the ASX's greatest growth stories, has dropped 11% recently.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Greencross Limited (ASX: GXL), the provider of veterinary services in Australia, is one of the greatest growth stories to have come from the ASX in recent years. After it traded at just 60c per share at the beginning of 2011, it skyrocketed nearly 1,700% to a high of $10.78 in August this year.

However, a market-wide sell-off has seen the shares retreat to $9.59, giving investors cause to think now may be a great opportunity to buy. Here's why they might be right…

Greencross operates in a quickly growing industry and is set to continue benefiting as household pets become more and more a part of the typical Australian family. For instance, dogs are increasingly going from the kennel to the couch and owners are thus willing to pay more for the care of their loved ones.

While Greencross already controls roughly 7.5% of the Australian market (thanks in part to its recent acquisition of pet retailer City Farmers), it has strong ambitions to increase that market dominance to 20%. As it continues to acquire small businesses and veterinary practices, it could well achieve that target in the coming years.

Buy, Hold, or Sell?

Although some investors would be deterred by the stock's high valuation (it trades on a P/E ratio of 29.8x) and its low dividend yield (currently just 1.3%, fully franked), I believe investors who buy today could be rewarded in capital gains over the coming years as the company continues to expand.

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

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »