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BOOM: The A2 MILK FPO NZ share price adds another 9%

The A2 MILK FPO NZ (ASX: A2M) (“a2 Milk”) share price is soaring again today, rising another 9.7% to trade at just under $1.70. Incredibly, the shares have now risen 65.4% over the last week – up from $1.025 per share – while they’re up nearly 265% since the beginning of June.

A2 Milk is one of several companies benefiting from soaring global demand for infant formula which has seen sales skyrocket. Demand is particularly hot in China right now while Australian supermarkets and pharmacies are also having a tough time keeping shelves stocked.

Bellamy’s Australia Ltd (ASX: BAL) is another popular brand which is struggling to keep up with demand while Blackmores Limited (ASX: BKL) is looking to make a push into the industry as well.

On Friday last week, the a2 Milk Company said it had recently increased the supply of a2 Platinum infant formula to customers, but noted that they “continue to experience a level of out of stocks on shelf.”

It also said that sales of a2 Platinum are expected to be $68 million for the six months to 31 December 2015. This forced it to increase its guidance on sales and earnings (before interest, tax, depreciation and amortisation, or EBITDA) for the full year.

Sales are expected to be between $300 million and $315 million for the 12 months, while EBITDA is tipped to be in the range of $33 million to $37 million. Those estimates compare to the guidance previously provided which guided for $285 million in sales and $22 million EBITDA.

With sales soaring, investors will be hoping for another bumper year in 2016 which could see the shares climb even higher.

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Motley Fool contributor Ryan Newman owns shares of Bellamy's Australia. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

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.

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