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Is it time to buy Bellamy’s Australia Ltd shares?

Over the last two months the Bellamy’s Australia Ltd (ASX: BAL) share price has been amongst the worst performers on the market with a decline of approximately 17%.

Does this make the infant formula company’s shares a buy?

While I still see more value in A2 Milk Company Ltd (ASX: A2M) shares, I am starting to believe that Bellamy’s shares are trading at an attractive level for a buy and hold investment.

And it doesn’t look like I’m the only one that thinks this way at the moment.

According to a change in substantial holding notice released this morning, investment bank Morgan Stanley and its subsidiaries have increased their stake in the company from 5.4% to 6.4%.

Furthermore, a note out of rival investment bank Citi in October revealed that its analysts have upgraded Bellamy’s all the way from a sell to a buy rating with a massive $14.40 price target.

The broker made the upgrade after being impressed with its quicker than anticipated turnaround. It does, however, have a high risk rating attached to the recommendation.

But considering this price target implies a potential return of over 36%, the risk/reward on offer here certainly does appear compelling.

All in all, I feel this could make Bellamy’s worth considering as an investment in 2018 alongside industry peer a2 Milk.

Here are three more top shares to buy in 2018.

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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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