One of the best performing groups of shares on the market in the last three months has been the infant formula shares.
During this time some of these companies have made triple digit gains for their respective shareholders. Is it too late to invest in them?
The a2 Milk Company Ltd (Australia) (ASX: A2M) share price has gained 36% in the last three months. Strong demand out of China for its infant formula products and favourable broker notes have been largely responsible for this gain. Whilst I think a2 Milk would be a great long-term buy and hold investment, I would suggest investors hold out in hope of a pullback before starting an investment.
The Bellamy's Australia Ltd (ASX: BAL) share price is up 36% during the period despite its disastrous acquisition of Camperdown Powder last month. Although the market has overlooked this latest drama, I believe investors would be better off avoiding Bellamy's for the time being. At least until it secures another CNCA-licenced canning agreement that will allow it further access to the lucrative China market.
The Bubs Australia Ltd (ASX: BUB) share price has been on fire in the last three months, rising a staggering 235%. A series of supply agreements both at home and in China have been behind the incredible rise of its shares. Whilst I think these agreements have positioned the company for potentially explosive earnings growth, I would suggest investors hold off an investment until sales data shows that the company is making progress in both markets.
The Wattle Health Australia Ltd (ASX: WHA) share price has also been on fire in the last three months and gained an impressive 190%. Much like Bubs, Wattle Health has signed a number of supply agreements that have put the company is a position to profit from the insatiable appetite for infant formula in Asia. Earlier this month the company raised $9.1 million through an extremely oversubscribed placement of shares. These funds will be used partly to acquire an interest in CNCA licensed manufacturer Blend and Pack. I've been impressed with what I've seen from Wattle Health and think it is well worth keeping a close eye on.
