You might never have heard of CVS (CVSG), but if you’ve got pets, your vet may well be part of its network of animal care conglomerate. The group has four main business areas: veterinary practices – with 256 surgeries that usually trade under local business names – diagnostic laboratories, pet crematoria and Animed Direct, an online dispensary.
The group has been busy buying up vet clinics in a market dominated by small, one-man outfits looking to retire. But it’s also enjoying solid, double-digit like-for-like sales growth, driven by an upswing in consumer confidence and greater proliferation of pet insurance. Veterinary profits grew by a quarter at the half-year stage in December, but the other business divisions are also performing well: laboratory sales are running 29 per cent ahead and crematoria revenue doubled in the first half. That was enough for us to put the shares back on our buy list a few weeks ago. Since then, the stock has risen by 20 per cent to 609p, but don’t let that put you off as we think there’s more to come, given the improving economic backdrop, scope for further acquisitions and the margin benefits of scale. Buy. JB