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Greencross Limited shares fall to a 52-week low: Time to buy?

The Greencross Limited (ASX: GXL) share price has continued its poor run today and sank to a 52-week low of $5.04.

This latest decline means the integrated pet care company’s shares have lost over a quarter of their value since the start of the year.

Is now the time to invest?

With its shares changing hands at just 14x trailing earnings, I think Greencross is great value for patient investors.

Its shares have come under pressure this year largely as a result of the retail side of the business and the potential impact that Amazon’s launch will have on it.

While there is a chance that the e-commerce behemoth will have a negative impact on it, I don’t believe it is anywhere near as bad as the share price decline makes it out to be.

Especially given the way the company has prepared for this eventuality with its loyalty program and the rollout of in-store veterinary clinics.

The loyalty program has so far produced impressive results. The company has 1.8 million active customers and in FY 2017 reported that over 87% of purchases were made through the program.

Not only does the program add insight into its customers’ spending habits and allows it to tailor marketing and promotional activities, but it also incentivises the customer to return with rewards and benefits.

The in-store veterinary clinics are also another key part of the puzzle in my opinion. By installing a clinic inside a Petbarn store, the company can save on rental costs and has the opportunity to cross-sell services and products to customers.

Foolish takeaway

In the short-term I feel there is a chance that retail shares such as Greencross, Myer Holdings Ltd (ASX: MYR), and JB Hi-Fi Limited (ASX: JBH) could still fall lower as investor sentiment weakens after Amazon launches.

But in the long-term I expect Greencross’ shares will recover strongly and push higher, arguably making now a good time to consider an investment.

Finally, here are three more small-cap shares I would buy today.

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Motley Fool contributor James Mickleboro has no position in any of the 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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