The Blackmores Limited (ASX: BKL) share price has been on a rollercoaster over the last few years. It rose all the way up to $218, sank to $87 and is now $170.
Blackmores is a vitamin and supplement business that has grown impressively.
I like the vitamin industry as a fairly defensive play. There may be arguments about its effectiveness, but it creates good recurring revenue once a consumer takes a daily supplement.
Here are a few more reasons to like Blackmores:
Diverse customer base
Blackmores has a variety of different customers in different countries. It may comfortably be a major player in Australia but it's always expanding its geographical footprint.
The current list of countries that it sells in includes Australia, China, Singapore, Thailand, Malaysia, Taiwan, Hong Kong, South Korea, Indonesia, Vietnam, Cambodia, Kazakhstan, Myanmar, Mongolia and Japan.
The more markets that Blackmores sells in the bigger its potential customer base becomes.
Expanding product range
A good retail-related business is one that can offer more products to different areas of the market. Blackmores is constantly adding more products to its range to address different ailments. It has more than 1,300 products across all brands and markets.
Another option is to acquire a business that offers something else. For example, it acquired a Chinese herbal medicine business for $23 million in 2016.
Growing sales and profit
The key reason for the share price turnaround has been the positive sales and net profit after tax update for the first three months to 30 September 2017.
Net sales for the period grew by 9% to $134 million compared to the prior corresponding period and net profit after tax grew by 28% to $15.4 million.
Foolish takeaway
Blackmores is currently trading at 41x FY18's estimated earnings with a grossed-up dividend yield of 2.27%. I'm glad that Blackmores is turning around but I don't think the first quarter growth justifies how much the share price has risen. If I owned shares I'd be thinking of selling and I wouldn't be buying at today's prices.
