The Bubs Australia Ltd (ASX: BUB) share price was a solid performer on the ASX on Wednesday.
It finished the day approximately 3.5% higher at 76 cents. This means that the goats milk infant formula and baby food company’s shares have gained a remarkable 347% since this time year.
Why have Bubs Australia shares more than quadrupled in value in a year?
Investors have been fighting to get hold of Bubs’ shares in the hope that the company becomes the next A2 Milk Company Ltd (ASX: A2M).
As the company’s products are made with goats milk, investors are betting on its infant formula selling well in a China market that has high levels of lactose intolerance.
While goats milk is still dairy and contains lactose, its lower levels of lactose appear to make it easier for children to consume.
During the last 12 months the company has signed countless distribution agreements with major Australian retailers and e-commerce platforms in China that should give its sales a boost in 2018 and 2019.
And with a market capitalisation of over $250 million, it certainly will need a big lift its sales figures to justify the lofty valuation. In February the company reported half-year gross sales of $3.72 million and a statutory loss before tax of $3.85 million.
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Motley Fool contributor Motley Fool Staff has no position in any 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 Scott Phillips.