The National Veterinary Care Ltd (ASX: NVL) share price is up over 23% since the start of 2017 and 119% since it listed in August 2015.
National Veterinary Care is Australia and New Zealand's second-largest veterinary business with a market capitalisation of $123 million.
It's currently utilising an acquisition strategy to increase the number of clinics that it owns. After just settling two clinics in New Zealand it has reached a total of 54 veterinary clinics. This tactic has worked well for the business so far and there is a lot of scope for further growth due to the fragmented nature of the veterinary industry across the country.
National Vet Care management include several ex Greencross Limited (ASX: GXL) staff, which is a good indicator of the potential success that could be in store in the future.
The pet industry is a defensive, yet growing industry with the number of pets growing alongside the human population. Pets are increasingly seen as an integral part of the family, which means pet owners are willing to spend whatever it takes at the vet to make sure their furry child is okay.
When you combine the willingness to spend with the rise of pet owners taking up pet insurance, it results in customers being more willing and able to spend the money necessary to help their pet.
Every vet that the business acquires gives National Veterinary Care more economic scale and will boost revenue and profit further. Considering Greencross has a network of 164 clinics, I think it's easy to see National Vet Care growing its portfolio eventually to this number at least, if not more.
National Vet Care is trading at around 26x FY17's estimated earnings and doesn't yet pay a dividend. These aren't particularly attractive statistics but I think it's still trading cheaply considering what the business may be able to achieve over the next two to three years.
Foolish takeaway
I am a fan of what the management are doing and how they are going about it, which is why I have been a shareholder for the past few months and will hold for the long term. At the current share price I think it would still be a good investment for the next few years.
