Our latest featured stock — a recommendation in our model portfolio — distributes medical equipment, products and supplies to the veterinary and dental markets, notes growth expert Elliott Gue, editor of Capitalist Times.

Patterson Companies (PDCO) started to reshape its portfolio with the June 2015 purchase of Animal Health International and the August sale of its medical segment for $715 million in capital.

The acquisition of Animal Health gave Patterson a 40% share of the $5 billion US market for production animals and 25% of the domestic companion-animal market.

The animal health division’s legacy business grew its US sales by 10.5% from year-ago levels during the firm’s fiscal fourth quarter and its UK revenue by 5 percent on a constant-currency basis.

Sales in the dental segment — which represents a little more than half the firm’s total sales — fell short of internal expectations in the quarter ended April 30.

However, management highlighted the opportunities created by the industry adopting digital technologies to improve efficiency and patients’ experience.

For example, Patterson Companies aims to double the user base for technologies that digitally map the patient’s teeth and then produce individual ceramic restorations that the dental practitioner can install in a single appointment.

Management has highlighted the potential for further acquisitions to establish a dental platform in Western Europe and bulk up its presence in the veterinary market.

Although Patterson Companies’ sales can fluctuate during periods of economic weakness, favorable demographics and the growing adoption of digital equipment and work processes in the dental industry creates a long-term tailwind.

We also remain bullish on the long-term prospects for the firm’s animal health segment, as American consumers increasingly view pets as family members.

Fully integrating Animal Health should also bolster the company’s profit margins after the current fiscal year.

Patterson rates a buy up to $55 per share, though its multi-year growth story will take time to play out.

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By Elliott Gue, Editor of Capitalist Times