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Bellamy’s Australia Ltd share price up 5% as company pours funds into organic milk

Baby formula star stock Bellamy’s Australia Ltd (ASX: BAL) is at the top of the S&P/ASX 200 gains list at the time of writing – up 4.9% to $17.75 – off the back of deals with three businesses to move closer to its goal of converting all conventional Australian dairy farms to organic.

Bellamy’s has made an initial $5.5 million investment with Fonterra Shareholders’ Fund (ASX: FSF) to develop an organic milk pool in Tasmania – signing up to take 20 million litres of milk from the pool annually with first rights over the additional volume.

A new multi-year agreement with Australian Consolidated Milk will see Bellamy’s guaranteed access to its supply as ACM constructs a new processing plant in Girgarre, Victoria.

And Bellamy’s has formalised an agreement with Tatura Milk Industries Limited to incorporate fresh organic milk into its production process.

Bellamy’s is an unstoppable leader in the baby food and formula space, paving the way for A2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB) who are also finding some success in the niche.

Bellamy’s shares are up an impressive 148% on its $7.14 share price at this time last year.

With a couple of highly successful years of trade on its books, how much longer will it be until Bellamy's can be considered a blue chip stock?

While we wait and watch check out these top 3 ASX Blue Chips To Buy In 2018

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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 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.

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