Many UK shares are effectively ‘on sale’ now, due soaring inflation and rising interest rates causing market volatility. Could a bull run be around the corner?
One stock I like the look of currently is CVS Group (LSE: CVSG). I believe it could be set for major growth and could boost my holdings. Here’s why.
UK shares fall but CVS Group rallies
CVS Group is a veterinary service provider with four core business divisions. These are veterinary practices, laboratories, crematoria, and its online retail business.
Despite many UK shares falling in recent months, CVS shares are actually on an upward trend when reviewing the 12-month share price activity. As I write, the shares are trading for 2,047p. A year ago, they were trading for 1,725p, which is an 18% increase.
Why I like CVS Group and risks to consider
One of the biggest bullish aspects of CVS is the fact that the pet care and veterinary market, especially in the UK, is a growing one. In fact, pet adoption in the UK is at the highest levels it has been for some time.
With this in mind, people need businesses like CVS to help care for their pets. This includes essential healthcare, as well as non-essential products and goods too. I believe there is great scope for growth here for CVS Group.
Next, CVS Group has an excellent track record of performance which shows growth and progress in recent years. I can see that revenue and profit have increased year on year for the past four years. However, I am aware that past performance is not a guarantee of the future.
Looking at returns, CVS Group does pay a small dividend at present with a modest dividend yield of 0.5%. I expect this could grow as earnings potentially grow too. I do understand that dividends are not guaranteed and can be cancelled by the business at any time, which applies to all UK shares.
Finally, looking at CVS Group’s recent growth aspirations, it has an eye on expansion into fragmented European markets. The business also has a propensity for smart acquisitions that would further boost the business.
From a bearish perspective, CVS’ bread and butter is its veterinary business, with approximately 500 practices in total. There is a severe shortage of doctors and nurses and this could impact its growth aspirations negatively.
Furthermore, although CVS Group has experienced great results due to its veterinary services, some of its other divisions, such as its retail business, may suffer in the short-term due to the cost-of-living crisis. Consumers may have less cash to spend on non-essential pet care items.
What I’m doing now
To summarise, I believe CVS Group is one of a number of excellent UK shares on the market today that could boost my holdings. I would be willing to buy some shares if I had the spare cash to do so.
I believe the pet care market is set for huge growth and CVS Group is in a great position to capitalise on this trend. Another stock I’m buying in the same industry, albeit with a different modus operandi is Pets At Home Group.