The InvoCare Limited (ASX: IVC) share price has risen by another 2% this morning after announcing another acquisition to the market.
The market-leading funeral business has announced that it has entered into a conditional sale agreement to buy Lester & Son in Albury-Wodonga, which should complete this month.
Lester & Son is a well-established operator performing around 460 funerals and 200 cremations per annum, it generates around $3.5 million of revenue annually according to InvoCare. It has operated in the region for more than 110 years and is a trusted name.
InvoCare re-iterated that this is part of its strategy to expand in regional markets, this buy means it is acquiring the leading funeral business on the New South Wales & Victoria border.
The purchase comes with two funeral homes with mortuaries and it also has a separate crematorium facility.
InvoCare's CEO and Managing Director, Martin Earp, said "Lester & Son provides us with an exciting opportunity to build on our regional strategy by providing us with significant access to a highly attractive market through a well-recognised and market-leading brand.
"The Lester & Son team have established a strong business in the area and we are delighted to have the opportunity to build on their success in Albury-Wodonga and surrounding areas. We warmly welcome the team and the local community into our business."
Is InvoCare a buy?
InvoCare is one of my favourite long-term growth ideas. Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This isn't a rocket for InvoCare, but it could lead to slow-and-steady gains.
A significant amount of the shares on issue are shorted. On 26 June 2018, nearly 11% of shares were shorted according to ASIC. The lower-than-expected death rate this year and the company's investment strategy could cause the share price to fall after it reports next month.
However, after the short-term uncertainty is known in the report, I think InvoCare would be an excellent ultra-long-term buy. It's currently trading at 24x FY19's estimated earnings.
