Wattle Health Australia Ltd shares rocketed 33% higher today

One of the biggest movers on the market today has been the Wattle Health Australia Ltd (ASX: WHA) share price.

The fledgling infant formula company’s shares were up as much as 33% at one stage, before giving some early gains back.

At the time of writing they are higher by just under 27% at $2.13.

Why are they higher?

With no news or broker notes to speak of, today’s gain appears to be traders speculating on the company being granted its CFDA approval this month.

The CFDA approval will allow it to sell infant formula in the lucrative Chinese market from January 1 2018 onwards when new regulations come into place.

At this point a2 Milk Company Ltd (Australia) (ASX: A2M) is the only ASX-listed company that has been granted this approval, but Wattle Health has previously advised that it expects to be given the green light itself this month.

While this could give the company an advantage over a number of rivals such as Bellamy’s Australia Ltd (ASX: BAL), which doesn’t expect to be granted approval until into 2018, it doesn’t guarantee sales.

It is for this reason that I am cautiously optimistic for Wattle Health in the future, but not willing to invest my hard earned money at this stage.

Until there are sales figures that back up the $250 million market valuation, I would suggest investors keep it on their watchlist.

In the meantime I think investors ought to consider one of these top shares instead.

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Motley Fool contributor James Mickleboro has no position in any of the 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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