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

Blackmores Limited (ASX:BKL) shares jump on prospect of continuing soaring sales

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »