MENU

Bubs Australia Ltd shares just reached another all-time high

One of the best performers on the market again today has been the Bubs Australia Ltd (ASX: BUB) share price.

In morning trade the fledgling baby food and infant formula company’s shares were up as much as 14% to an all-time high of $1.10.

Although they have given back some of these early gains, at the time of writing the Bubs share price is still 9% higher at $1.05.

Why are its shares higher?

While there has been a spot of positive news out of the company this month, I feel the main driver of this share price gain has been speculators betting on Bubs becoming the next a2 Milk Company Ltd (Australia) (ASX: A2M).

In fairness, Bubs’ management team has done a remarkable job with arranging supply agreements with key Chinese e-commerce platforms and mother and baby stores.

But it is important to note that at this stage these agreements have not led to a meaningful increase in sales revenue for the company. Sales may have increased by 109% in the first-quarter, but this was from a very low base.

And sales are unlikely to grow too drastically until the company has received its CFDA approval that allows it to sell into the China market from January 2018 onwards. Its application is expected to be lodged by the end of the current quarter, meaning it is unlikely to be ready for the January 1 deadline.

Once it does get approval then time will tell whether Chinese consumers take a liking to its products. If they do then it could end up living up to today’s lofty market valuation, but until then I plan to hold off an investment as I feel the risks at this stage far outweigh the potential rewards unfortunately.

For now, these top growth shares might be better options than Bubs if you ask me.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.