The incredible rise of Bubs Australia Ltd (ASX: BUB) has continued for a third-straight day. Since listing on the ASX on Tuesday via a reverse takeover at 10 cents, the infant formula manufacturer's shares have now tripled to hit 30 cents.
This gain is all the more impressive when you consider that a lot of investors got their fingers burnt recently with Bellamy's Australia Ltd (ASX: BAL). Investor appetite for infant formula clearly remains strong.
Why has its share price rocketed?
As well as being stocked in Coles supermarkets, the company's products have a growing presence on Chinese e-commerce giant JD.com.
It is the latter of the two that has investors most excited in my opinion. Especially with the wife of JD.com founder Richard Liu on its board.
Nancy Zhang is a 23-year-old Chinese social media megastar and also a new mum. I see her involvement as an extremely valuable asset and one which could give the Bubs brand a big lift in the lucrative China market.
But with a market cap of $70 million (when including escrowed shares) and just $4.3 million of sales in FY 2016, Bubs is starting to look a little on the expensive side to say the least.
Although I firmly believe the company has enormous potential, I would suggest investors hold off an investment and wait to see how sales increase over the next few months.
In the meantime an investment in a2 Milk Company Ltd (Australia) (ASX: A2M) could be a great option for investors wanting exposure to the infant formula boom.
