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3 reasons why the BWX Ltd share price could be a bargain buy

The BWX Ltd (ASX: BWX) share price is up over 25% since the start of 2017, is it still a buy?

I think it could be.

BWX has a market capitalisation of $466 million and is known for natural beauty brand Sukin. Here are three reasons why I think BWX could be a good buy:

Changing customer habits

There is a growing trend among consumers to want products that are more natural, don’t have any potential side effects and are gentle on the environment.

BWX’s products are perfect for this demographic because all of its products are natural and Australian made. In fact BWX markets its products as Australian-made, vegan, carbon neutral, cruelty free and naturally formulated skincare products.

I think demand for this natural product is only going to become more popular as time progresses.

International expansion

BWX is doing very well in its domestic market of Australia. However, the key to growth could be expanding its sales into Asia, Europe and North America.

It currently sells its products in countries such as the UK, Canada, China, Singapore and Malaysia. Although these sales only make up a smaller portion of profit, it is growing at a fast pace.

In its latest results to 31 December 2016 it reported that Sukin export sales were up 115.7% compared to the prior corresponding period (pcp).

BWX’s net profit after tax increased by 30.2% and the earnings per share (EPS) increased by 11.5%.

Diversification

Most Australian investor portfolios are probably full of financial, healthcare and technology stocks. Each area is worthy of an investment, but it leaves the portfolio focussed on only a few sectors.

BWX is very different to most other types of businesses on the ASX. A lot of beauty products are from North America or Europe, so it’s a rare opportunity to buy an Australian beauty product brand.

Foolish takeaway

BWX is trading at 28x FY17’s estimated earnings with a grossed-up dividend yield of 2.07%. This is fairly expensive, but I think a long-term investor would be beautifully rewarded at this share price.

For more beautiful ideas, our analyst team have created this report of more businesses which are expanding internationally that could be worth an investment.

A Big, Fat, Fully Franked Dividend

This company's dividend is almost the stuff of legends. Since it started paying dividends in 2007, it has increased its payout to shareholders every single year, a run that includes 21 consecutive dividend increases.

Based on the last 12-months of dividends, its shares are currently offering a fully-franked 4.8% yield, which grosses up to almost 7% when those franking credits are included. And in stark contrast to the likes of Commonwealth Bank and Telstra, this company just increased its dividend by over 13%, and guided for 2017 profits to grow by 20%!

Discover the name of this "new breed" of blue chip along with 2 others in our new FREE report "The Motley Fool's Top 3 Blue Chips Stocks For 2017."

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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of BWX Limited. 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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