One of the best performers on the local share market on Monday has been the Bellamy's Australia Ltd (ASX: BAL) share price.
At the time of writing the infant formula company's shares are up 7% to an all-time high of $22.66.
Incredibly, this means that Bellamy's shares have now risen a staggering 500% over the last 12 months after it staged a miraculous recovery.
Why are its shares higher today?
With no news out of the company, I suspect that today's gain can be attributed to Bellamy's shares being included in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) today following the March rebalance.
Being included on the S&P/ASX 200 means that index funds like BlackRock's ISHAUS200/ETF (ASX: IOZ) will need to pick up shares in order to track the benchmark index accurately.
Furthermore, some fund managers have restrictions on the shares that they can buy. One common restriction is shares outside the benchmark index. Bellamy's inclusion means these fund managers can now add it to their portfolios.
The shares of fellow additions to the index Xero Limited (ASX: XRO), Smartgroup Corporation Ltd (ASX: SIQ), and Ausdrill Limited (ASX: ASL) are all pushing higher today, albeit not as strongly as Bellamy's.
Should you invest?
While I think that Bellamy's has a bright future ahead of it and could deliver a result in both FY 2018 and FY 2019 that more than justifies the premium its shares trade at, I would still prefer to buy in at a lower price.
Further, although I think it is a similar story for A2 Milk Company Ltd (ASX: A2M), I would pick a2 Milk Company ahead of Bellamy's due to the fact it already has its Chinese accreditation in place and is rapidly winning market share. I think this makes it less risky than Bellamy's at this stage.
