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.

Never fear.

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.

If you like growth better than a shrinking business... Long term rather than short term...

Then this "dirt cheap" company might be for you. It's growing like gangbusters, and trading on a strong fully franked dividend yield. With interest rates set to stay at these low levels for years to come, for income-hungry investors, including SMSFs, this ASX company could be the "Holy Grail" of dividend plays for 2016. Click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share.


Motley Fool contributor Claude Walker does not own any of the companies mentioned in this article. You can follow him on Twitter @claudedwalker

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.