Whilst 2015 will be considered a year to remember for shareholders of Blackmores Limited (ASX: BKL), so far 2016 has been a year to forget. The shares of the growing food supplements company have dropped by an almighty 43% year to date, much to the dismay of its shareholders.
But with its shares changing hands at just under 22x full year earnings, I believe investing in Blackmores is a no-brainer right now. After all this is a company which just posted an incredible 52% rise in sales to $717 million and an even more impressive 115% increase in net profit after tax of $100 million.
So why is the Blackmores share price down 22% since it announced its record-breaking results? It all comes down to a comment by management in its earnings release which stated that:
"The Australian wholesale market is volatile and has softened in recent weeks impacted by retailers destocking and some exporters changing the channels through which they acquire products. As a result, at this stage we expect our first quarter result to be down compared to the prior corresponding period."
For a company exhibiting such high levels of growth it is worrying to read that sales are expected to drop. But this does appear to just be a temporary issue, with management confident sales will improve as the year progresses thanks partly to the continued development of its business model and new growth channels.
The other factor that I expect will be a continued boost to sales is demand from Asia. There have been concerns over changes to Chinese import regulations, but management conversely sees these evolving regulations as an opportunity to expand in the retail market.
In addition to this Blackmores has just launched into a potentially lucrative Indonesia market. I believe its growing middle class could make it an important part of its Asia growth strategy in the years ahead.
Overall much like Bellamy's Australia Ltd (ASX: BAL), I believe the recent weakness in the Blackmores share price has presented investors with a great opportunity to make a long-term investment today at a great entry price. Its strong growth prospects and rapidly growing dividend make this a strong buy as far as I'm concerned.
