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Bubs Australia Ltd shares rise on Woolworths Group Ltd news

In morning trade the Bubs Australia Ltd (ASX: BUB) share price has defied the market decline and is pushing higher again.

At the time of writing the infant formula company’s shares are up 2% to 74 cents compared to the market’s 1.3% decline.

Why are they higher?

This morning Bubs announced that its goat milk infant formula product is to be ranged in Woolworths Group Ltd (ASX: WOW) supermarkets.

According to the release, all three stages of Bubs Advanced Plus+ goat milk infant formula will be available in selected Woolworths supermarkets from April. These supermarkets are ones targeting consumers in key metropolitan areas with high penetration of infant formula customers

CEO Nicholas Sims appears confident that this could prove to be a big win for the company. He has stated that: “Goat dairy and infant formula is experiencing rapid growth domestically and overseas. Woolworths ranging of Bubs Australian made goat milk infant formula will only further enhance the appeal to consumers both in Australia and internationally in China and South East Asia.”

Should you invest?

Much like industry peer Wattle Health Australia Ltd (ASX: WHA), I have been very impressed at the way Bubs has grown its distribution network over the last 12 months.

Furthermore, I think its acquisition of NuLac Foods last year was a great move. This has made Bubs a vertically integrated producer of goat milk infant formula and, importantly, guarantees it with sustainable supply and control over its key base ingredient and capacity to meet growing future demand.

But as promising as this is, I believe a lot of success has already been built into its share price. While I am confident Bubs could provide some decent competition for A2 Milk Company Ltd (ASX: A2M) in China in future, until its sales reflect this I’ll be sitting this one out.

Until then I'd buy a2 Milk shares or one of these hot growth stocks.

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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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