The smaller a business is the more potential that it has to grow. This is certainly true of National Veterinary Care Ltd (ASX: NVL), which has only been operating for a few years.
It's a veterinary clinic operator that will hopefully beat the market due to the following reasons:
Acquiring clinics
National Vet Care started life with only one clinic and has been on an acquisition rampage since it listed on the ASX.
The business has a loose aim of adding six clinics to its network each year, but it has been growing at a quicker rate than that since listing.
Since 30 June 2017 the business has grown its clinic number by 13.2% by adding seven clinics.
Growing and defensive industry
Vets may not seem like the most defensive industry, but I think they have a lot going for them.
We treat our pets more and more these days, some call it 'humanisation'. Around three quarters of dogs and two thirds of cats go to the vet each year, which generates recurring revenue.
The number of cats and dogs in Australia has grown by 7% and 3% respectively since 2013. If the numbers keep growing in line with the human population then there should be a lot more growth in store for the industry.
No retail element
Greencross Limited (ASX: GXL) is a very promising business but the fact that so much of its earnings are reliant on retail is a potential negative.
National Vet Care is purely a veterinary business and has stated that it will always remain so. I think this is a good reason for choosing the business over Greencross.
Foolish takeaway
National Veterinary Care is currently trading at 31x FY17's earnings with a trailing grossed-up dividend yield of 1.62%.