Is it too late to buy Treasury Wine Estates Ltd shares?

Although it has faded slightly in afternoon trade, this morning the Treasury Wine Estates Ltd (ASX: TWE) share price climbed to an all-time high of $20.20.

This brought the wine company’s 12-month return to an impressive 56%.

Is it too late to invest in Treasury Wine Estates?

As far as one leading broker is concerned, there’s still plenty of upside left for the company’s shares over the next 12 months.

According to a broker note out of Bank of America Merrill Lynch (BAML), courtesy of the AFR, the analyst covering Treasury Wine Estates has retained his buy rating and lifted the price target on the company’s shares from $21.00 to $24.00.

The analyst, David Errington, made the move after touring the company’s Barossa Valley wine production facility in South Australia.

Errington believes that the wine industry has entered an upturn in a cycle that typically lasts 20 years.

Yet on the supply side there has been little by way of response to tighter market conditions. This has been put down to many winemakers finding finance hard to come by, preventing them from building up their inventories.

Whereas Treasury Wine Estates has no such problem and possesses the production facilities required to respond to the expected increase in demand.

In light of this, Errington predicts that the wine company could triple its sales to $7 billion by 2030.

Should you invest?

I think Treasury Wine Estates is a great option for investors and would have to agree with BAML that it has significant long-term growth potential.

While it isn’t the cheapest share on the market, I believe the growing demand for its wines will allow it to generate strong enough earnings growth to more than justify the premium.

As a result, I would put it up there with A2 Milk Company Ltd (ASX: A2M) and Aristocrat Leisure Limited (ASX: ALL) as one of the best growth shares on the Australian share market.

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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. 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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