A2 Milk Company Ltd shares tumble lower

It doesn’t happen that often, but the A2 Milk Company Ltd (ASX: A2M) share price was one of the worst performers on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) on Thursday.

The fast-growing dairy company’s shares finished the day 4.5% lower at $7.01.

This means that a2 Milk’s shares are now trading almost 13% off their 52-week high of $8.05.

Why have its shares plunged lower?

With no news out of the company or broker notes to speak of, today’s decline appears to be a case of profit taking from investors.

Which shouldn’t come as a huge surprise. After all, even after factoring in today’s decline, a2 Milk’s shares are up over 230% since this time last year.

A2 Milk wasn’t the only growth share to tumble lower today. The shares of Blackmores Limited (ASX: BKL) BWX Ltd (ASX: BWX), and Bubs Australia Ltd (ASX: BUB) have also posted notably sharp declines.

Should you buy the dip?

I think this is a great opportunity for patient investors to snap up a2 Milk shares at a reasonably fair price.

While its shares are still expensive compared to the market-average, I think they are good value based on its current growth profile.

This is especially the case when you consider the huge opportunity the company has in the lucrative China market. Although sales in the nation have been growing at an incredible pace, the company still only has a tiny share of the infant formula market.

And with Chinese regulations likely to lead to a reduction in competition, I suspect that a2 Milk could win a greater share of the market over the next 12 months.

Overall, I expect this and its improving performance in the UK and United States will lead to above-average earnings growth for many years to come. This should more than justify the premium that its shares trade at today.

As well as a2 Milk I think these top growth shares have fallen into the buy zone.

Top 3 ASX Blue Chips To Buy In 2018

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 2018."

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 and has recommended Blackmores Limited and BWX Limited. 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.