Is there more to come for Blackmores Limited after today’s 4% rise?

Credit: Blackmores

The Blackmores Limited (ASX: BKL) share price rose 4.3% to close at $185.60 on Monday, and shares have now risen more than 12% in the past month.

Today’s rise appears to have been partly driven by comments from the Bellamy’s Australia Ltd (ASX: BAL) CEO, Laura McBain, today, in regards to the impact on the company of a new Chinese tax for products sold on the grey market.

As Ms McBain noted, “It won’t have an impact on the demand for Bellamy’s products going forward.

What applies to Bellamy’s could equally apply to Blackmores.

It seems almost hard to remember that the vitamins and supplements manufacturer’s share price was around $54 a year ago, before a meteoric rise to $220.90 earlier this year.

That rise was driven by soaring demand for the company’s products, particularly from China, and was reflected in the company’s recent financial results. A 159% rise in net profit for one.

Blackmores does have official sales channels into China, but it seems that the company is also selling plenty of its product to entrepreneurs in Australia who are on selling the product into China.

High-quality Australian products, particularly infant formula and vitamins, are in huge demand from the rising Chinese middle class, and that hardly seems likely to drop off anytime soon.

Blackmores has also announced its entry into the infant formula market – capitalising on its existing brands to sell high quality formula to Chinese parents. Demand could continue to skyrocket too after China relaxed its one-child policy after 35 years late last year and couples can now have two children if they want.

A total relaxation of the rules, allowing couples to have as many children as they want could be the next step, and could certainly arrive much sooner than another 35 years.

Foolish takeaway

By no means are Blackmores shares cheap, trading on a trailing P/E ratio of over 42x. But if the company can continue to generate strong growth, that P/E will become meaningless, and a share price of above $200 beckons.

Could these dividend picks double your money?

When renowned dividend investing pros like Andrew Page issue buy alerts, it pays to listen. Because investors who followed Andrew's recommendation of Australian Pharmaceuticals in early 2015 could've doubled their money in just over a year, turning $15,000 into over $30,000 by the time he recommended they sell and lock in their profits. Chances are you won't want to miss uncovering the names of Andrew's newest share recommendation and short list of 3 dividend Best Buys Now Shares.
Click here to learn more about these potentially life-changing shares.

Motley Fool contributor Mike King owns shares of Bellamy's Australia. You can follow Mike on Twitter @TMFKinga

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.