Why Horse-Drawn Carts Could Be A Better Bet Than Baby Food
While it’s true that Australian baby formula companies such as A2 Milk (ASX:A2M) and Bellamy’s Organic (ASX:BAL) made a small fortune for investors in 2015, now could be the time to consider an investment in horse drawn carts.
Bellamys and A2 must continue to sell high priced formula to China for many years to come to justify current share prices, and the only reason to think this could happen is that they have very strong brands and China is finally relaxing the one child policy. The fact that children consume formula in China until an older age than do children in Australia is barely relevant, and Chinese parents will probably forget that children were previously poisoned to death by a home grown Chinese brand.
On the other hand, Horse Drawn Cart companies have been sold down to the point that there isn’t even an ASX listed Horse Drawn Cart company.
I have the solution.
I can exclusively reveal that I am in the early stages of planning the IPO for Horse Drawn Carts Limited (ASX:HDC).
Never mind the fact that Horse Drawn Carts are an 18th century technology.
Never mind the fact that the pollution from horses defecating everywhere causes sickness and repulsive aromas.
Horse drawn carts have staying power, and I’m driving a resurgence. Even hundreds of years since cleaner technologies were invented, you still see them on the streets, on movie screens, and even in the draft prospectus for Horse Drawn Carts Limited.
The best part is that whereas the combined market capitalisations of A2 Milk and Bellamys Organic stretch into the billions, Horse Drawn Carts Limited will have a market capitalisation of only $10 million on listing. Now, don’t get me wrong, Bellamys is a great company. But is it really worth more than 100 times Horse Drawn Carts Limited?
The comparison is totally valid and relevant.
Horse Drawn Carts Limited is a Buy.
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Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
While it?s true that Australian baby formula companies such as A2 Milk (ASX:A2M) and Bellamy?s Organic (ASX:BAL) made a small fortune for investors in 2015, now could be the time to consider an investment in horse drawn carts.
Bellamys and A2 must continue to sell high priced formula to China for many years to come to justify current share prices, and the only reason to think this could happen is that they have very strong brands and China is finally relaxing the one child policy. The fact that children consume formula in China until an older age than do children…