In 2017 the A2 Milk Company Ltd (ASX: A2M) share price was the best performer on the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) with a massive 261% gain.
Pleasingly for shareholders, the dairy company's shares have managed to build on this gain in morning trade and have had a solid start to the new year.
In late morning trade the dairy company's shares are up almost 2.5% to $7.55.
Can a2 Milk beat the market in 2018?
While I doubt a2 Milk will be able to match its 2017 share price performance this year, I still think it has the potential to be a market-beater.
Thanks to regulation changes in China, I feel a2 Milk is well-positioned to continue growing its share of the Chinese infant formula market.
At the last count a2 Milk held just a paltry 3.5% value share in China despite its rampant growth in the lucrative market. Considering the growing popularity of its products in the country, the growing middle-class, its unique a2 protein ingredient, and changes to regulations, I wouldn't be surprised to see this market share double over the next few years.
This could lead to above-average profit growth that more than justifies the premium its shares trade at today.
I'm not the only one that is bullish on the fast-growing dairy company. A note out of Citi last month revealed that the broker has retained its buy rating and $8.85 price target on a2 Milk's shares.
This price target implies potential upside of over 17% for its shares over the next 12 months.
In my opinion this could make it worth snapping up shares today ahead of industry rivals Bellamy's Australia Ltd (ASX: BAL) and Bubs Australia Ltd (ASX: BUB).
