Since the Covid-19 lockdowns began, there have been several social changes that I believe have created multiple UK stock investing opportunities. The most obvious difference is the transition to a work-from-home lifestyle. However, I’ve spotted another trend which seems to have gone unnoticed. With it, I’ve identified a stock that could be one of the best shares to buy now for my portfolio. Let’s take a look.
Best growth shares to buy now?
With everyone stuck at home during lockdown, the level of pet ownership has skyrocketed. The Pet Food Manufacturer’s Association performed a survey during the height of the pandemic in 2020. It revealed that in the UK alone, 2.1m people had brought a new pet into the family, with another 1.8m intending to do so soon.
This sudden surge in companion animals is excellent news for CVS Group (LSE:CVSG). The UK growth stock provides a vast range of veterinary services broken down into four divisions. The largest is its veterinary practices that generate nearly 87% of total revenues. These facilities are focused on treating injured or unwell companion, equine (horses), and farm animals.
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The three remaining business segments are much smaller, but they are just as essential. Animed Direct provides a pharmacy service for prescription and non-prescription medicines, pet food, and animal care products. The laboratories division offer diagnostic services directly to the veterinary practices and other third-party vets. Lastly, if the worse comes to pass, CVS Group provides cremation services for pet owners and clinical waste disposal for practices. All these segments tie into each other nicely, which is a trait I like to see when looking for the best shares to buy now.
Investing in UK stocks always has some risks
The veterinary care market is highly fragmented. This means there are a lot of independent vets out there. However, larger corporations have begun consolidating the market space by acquiring these independent practises. Since these larger businesses most likely have a supply and service chain already in place, CVS Group may begin losing its third-party customers.
Another potential problem arises from how veterinary clinics and laboratories operate. They require a constant and uninterrupted supply of pharmaceutical products. As it stands, CVS Group sources the majority of these products from a single wholesaler. This is particularly concerning to me. If this wholesaler cannot complete orders on time, it will have a significant adverse impact on the stock’s performance. CVS Group has begun diversifying its supply chain, but for now, it remains overly dependent on a single key supplier.
CVS Group: can the growth stock keep growing?
Before the pandemic began, there were an estimated 9m dogs and 7.5m cats owned as pets in the UK. The recent surge in companion animals during lockdown would indicate that these figures are much higher today.
As of June 2020, CVS Group only recorded 0.7m dogs and 0.3m cats going through one of its four divisions. Which means that even before the increase in the pet population, the business has only captured less than 7% of the market – that’s a lot of room for growth.
Personally, I think CVS Group is on course to have a stellar year throughout 2021 and beyond, and could easily be another fine addition to my own portfolio.
