Is Treasury Wine Estates Ltd a buy?

Shares in global wine company Treasury Wine Estates Ltd (ASX: TWE) have had a bumper 12-months, rising 43% from its $12.01 share price at this time last year to an April 6 close of $17.18.

Treasury zoomed to all-time highs after the announcement of strong half-year results in January, with NPAT up 37% to $187.2 million, EPS growth of 38% to 25.6c per share and EBITS growth across all regions.

Globally, Treasury is only just beginning to make a name for itself, meaning the current share price could bolt even higher if its operations in Asia and Europe continue to outperform expectations.

Treasury has some solid transformation strategies in play in its United States region with the appointment of new full-service distributor partners to assist with brand portfolio growth including Breakthru Beverage Group in Illinois, Colorado, South Carolina and Minnesota, Johnson Brothers across Indiana Hawaii, Virginia and Dakota, Vehrs Distributing in Oregon and Specialty Imports in Alaska.

Such collaborations should pay off for the company, as distribution partners work to manage sales execution on behalf of Treasury as the company focuses on accelerating growth in other regions.

Treasury is yet to log the full effects of its exponential growth in Asia, which will likely help to boost overall profits in the second-half and beyond.

As of January, Treasury’s Asian market had reported a 48% rise in EBITS over the last 6 months to $117 million with Treasury continuing to leverage its route-to-market to drive growth across key brands such as Masstige and the US-sourced Luxury brand

China’s expanding middle class are only just getting a taste for quality wines, with Treasury poised to meet this growing demand with a strong foothold in the market already and a detailed strategy in play to manage continued growth in the region.

Treasury isn’t the only ASX-listed company using clever positioning in global markets to boost profits and kick goals.

Shares in Australian horticultural company Costa Group Holdings Ltd (ASX: CGC) have pushed higher over the past 12-months, zooming up 65% from its $4.38 share price at this time last year to its April 6 closing price of $7.25.

Macquarie Group Ltd (ASX: MQG) last month slapped an outperform rating on Costa Group – increasing its price target to $7.60 as the company reported strong growth in its produce segment.

Costa Group is asserting itself in the Chinese and North African markets with heavy demand in the regions likely to help the company continue to report double-digit underlying earnings growth for the medium-term future at least.

On the retail front giants like Premier Investments Limited (ASX: PMV) are also doing big things internationally to bolster its bottom line, with Premier focused on the global expansion of its Smiggle stationery brand and sleepwear brand Peter Alexander to drive profits.

Foolish Takeaway

While Treasury shares have been trading at all-time highs in the last few months, I think a buy opportunity is still on the cards for the stock, with plenty of potential yet to be unlocked in its Asian market particularly and Treasury’s proven ability to capitalise on demand trends in other overseas markets a good benchmark for its future success.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and Premier Investments Limited. The Motley Fool Australia has recommended Treasury Wine Estates Limited. 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 Scott Phillips.

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