Two growth stocks I think possess exciting potential are Experian (LSE: EXPN) and CVS Group (LSE: CVSG). Here’s why I plan to snap up some shares as soon as I have some available capital.
Experian
You may think of Experian as one of the largest credit score checking services, which is correct. However, there’s much more to the business and this is where the growth potential really excites me.
The shares are up 13% over a 12-month period, climbing from 2,825p at this time last year, to current levels of 3,235p.
In the digital world we live in, data is arguably one of the most coveted commodities and Experian has access to bucket loads of it! Credit scoring is already a great tool it offers and has helped the firm grow massively. With the AI revolution ramping up, the firm potentially has endless products and services it could provide with the data it possesses, which could boost share price, performance, and payouts.
To date, Experian’s excellent market share and growth has helped it perform well and record excellent organic growth. Plus, at present, there’s a dividend yield of 1.3% on offer. This isn’t the highest but could grow, in line with the business. However, dividends are never guaranteed.
From a bearish perspective, Experian shares trade for a premium on a price-to-earnings ratio of 30. Any bad news could send the shares tumbling. Conversely, I’m of the belief that sometimes you must pay a premium for quality companies. Furthermore, a bigger worry is the firm’s debt levels, standing close to £3.5bn. Paying down debt during times of higher interest can be costlier, and could take priority over growth aspirations.
So yes, I could wait for the shares to dip, but I don’t think they will. Barring a major issue, the only way is up for Experian shares, in my opinion.
CVS Group
CVS is a veterinary service provider to help us look after our pets. The business is split into four divisions, veterinary practices, laboratories, crematoria, and online retail.
The shares are down 16% over a 12-month period, from 1,918p at this point last year, to 1,685p as I write.
CVS’s growth potential is sky high, if you ask me. Firstly, pet ownership has never been higher than now, at least in the UK. Our pets need the same love, attention, and amenities that we do! That leads me nicely onto my next point, which is CVS’s multi faceted offering. This ranges from general healthcare, unfortunate but essential funeral services, as well as retail for owners to buy essentials and spoil their pets!
The company’s organic and acquisition-led journey has been impressive to date. However, the latter is something I do consider risky. When acquisitions don’t work out, they can be costly financially, as well as have lasting damage to investor sentiment and potentially returns too.
Its half year update released yesterday was positive. For the six months ended 31 December 2023, four new acquisitions were completed in Australia as the company broadened its footprint. Revenue and like-for-like sales increased by 11% and 6%. Furthermore, membership numbers increased too.
CVS looks well positioned to benefit from rising pet ownership numbers and there’s no telling where the shares could go, especially when volatility dissipates.
