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Why the Bubs Australia Ltd share price rocketed 11% higher today

The Bubs Australia Ltd (ASX: BUB) share price has once again been a big mover on the local share market today.

In afternoon trade the organic infant formula and baby food company’s shares are up 11% to 29.5 cents.

Incredibly, this means its shares have now gained over 90% in just three months.

What happened?

This morning the company announced that it has entered into a distribution and field marketing services agreement with Australia’s leading pharmacy and healthcare distribution company HealthOne.

According to the release, the agreement will see HealthOne deliver tailored solutions in order to enhance Bubs brand presence across the healthcare channel.

Ultimately this is expected to significantly increase the number of individual locations where consumers can access Bubs products in Australia.

I think this is great news for the company and I’m once again very pleased to see the brand’s footprint expand.

Furthermore, this agreement builds on two major agreements that were announced last month in the massive China market.

The first was a distribution deal with Brilite Nutritionals which is expected to result in its products being sold through over 2,000 mother and baby stores across China.

The second was a strategic partnership with cross-border e-commerce giant NetEase Kaola.com.

This partnership has opened up the brand to 15 million targeted customers seeking quality international brands through its platform. Approximately 42% of Kaola’s customer base have purchased baby products in the past.

Should you invest?

As I have said a number of times before, I think Bubs has positioned itself perfectly to take on the likes of Bellamy’s Australia Ltd (ASX: BAL) and a2 Milk Company Ltd (Australia) (ASX: A2M) both at home and in China.

However, there is an awful lot of potential already built into its share price, making Bubs a reasonably high risk investment today. For this reason I would suggest investors hold out until its full-year results are released next month

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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