Finding UK stock investing opportunities during the pandemic continues to be an exciting journey. I’ve found that some of the best growth stocks to buy now are the businesses that have benefited from the lockdowns and will also continue to thrive long after Covid-19 becomes a chapter in the history books.
The level of the pet population in the UK has skyrocketed in 2020. At the start of the year, a survey by the Pet Food Manufacturer’s Association revealed that 2.1m people added a new pet to the family, with another 1.8m people intending to do so in the near future.
I previously explored CVS Group as a potential investment to profit from this rising trend. But can this alternative UK stock also thrive? Let’s take a look.
Best growth stocks to buy now?
Pets at Home Group (LSE:PETS) is a leading provider of pet supplies and veterinary services. It sells over 9,600 products, such as food, toys, litter, and kennels, across more than 450 physical stores around the UK. What’s more, around half of these locations are equipped with veterinary practices to compliment the business’s non-retail side. As a result, the company has the largest branded network of first-opinion clinics in the UK.
Its retail stores generate almost 90% of total revenue, with more than half of that from pet food sales alone. And despite Covid-19 related restrictions, revenue has continued to grow by 17.5%.
The business appears to have a high level of customer loyalty that has only been solidified by its VIP membership programme. Customers can enjoy discounts, both in-store and online. At the same time, the stock leverages its customer data to drive even more sales. At the end of 2020, VIP membership grew by 26% to more than 6.2m customers. Combining that with the double-digit revenue growth makes me believe that this growth strategy is working.
UK stock investing is never risk-free
The firm only sells its products and services within the UK. But it operates with a global supply chain, meaning that the costs of doing business often involves international currencies. This subsequently exposes the firm to foreign exchange rate risks.
Another potential threat I spotted relates to its distribution centres. It only has two of them, serving the north and south side of the country. While unlikely, if a disaster were to occur at only one of these sites, the vast majority of its stores and clinics will lose their access to their supplies. Needless to say, that would create significant disruption within the business.
Bottom line: should I buy this growth stock?
With the vaccine rollout underway, the pandemic will hopefully soon come to an end. And as people return to work, the growth in the pet population will likely begin to slow. At least that’s what I think.
But even with a slowdown, the newly acquired pets aren’t going to disappear overnight. After all, a pet is for life. These animals all need feeding, entertainment, and healthcare. Something that Pets at Home appears perfectly positioned to provide.
With that in mind, the business definitely looks like it could be one of the best growth stocks to buy and add to my portfolio.
Zaven Boyrazian does not own shares in Pets at Home Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.