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Why the Bubs Australia Ltd share price is rocketing higher again

The Bubs Australia Ltd (ASX:BUB) share price is on the move again today after the organic infant formula and baby food company made its second positive announcement this week.

In afternoon trade it is 6% higher at 18 cents.

On Tuesda, the BUB share price surged higher after the company announced that supermarket giant Coles [owned by Wesfarmers Ltd (ASX: WES)] had increased the number of stores that stock its Goat Milk Infant Formula brand.

Previously 322 Coles stores stocked the product. This has now been increased by 42% to 456 stores, effective immediately.

Its share price was given a further boost today after the company advised that it had added Sigma Pharmaceutical Limited (ASX: SIP) nationally and Symbion in New South Wales and Western Australia to its wholesale distribution network.

This agreement gives Bubs immediate access to over 5,000 pharmacies nationwide. These include fast growing retail pharmacy brands such as Amcal, Good Price Pharmacy, and Guardian Pharmacies.

Furthermore, the company has also seen its products launched in Discount Drug Stores nationally, with catalogue and point of sale promotional support in over 100 stores.

Should you invest?

This is certainly more great news for the company and I’m not surprised to see investors snapping up its shares.

But at this stage I think it is too early to know for sure whether Bubs will be the next a2 Milk Company Ltd (Australia) (ASX: A2M), or a flop like Bellamy’s Australia Ltd (ASX: BAL).

Whilst I’m optimistic that the company has positioned itself for a bright future, at this point I think an investment is a little too high risk and investors would be better off keeping its shares on their watch list.

In the meantime this hot dividend share could be a great option for investors. Not only does it pay a generous dividend, but I believe it could offer decent share price gains this year as well.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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.

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