MENU

Should you buy A2 Milk Company Ltd (ASX:A2M) shares?

On Thursday the A2 Milk Company Ltd (ASX: A2M) share price was one of the best performers on the market with a gain of almost 6%.

The infant formula and dairy company’s shares surged higher after the Chinese government revealed that tough new e-commerce laws would not be introduce in January. Instead, the China State Council decided to refine its existing policies.

This was a big win for the likes of a2 Milk Company, Bellamy’s Australia Ltd (ASX: BAL), and Blackmores Limited (ASX: BKL), as there had been concerns that strict new rules would have had a negative impact on certain sales channels.

Is it too late to buy a2 Milk Company’s shares?

I don’t believe it is. At a touch under 30x estimated forward earnings, I think a2 Milk Company’s shares are trading at a fair price for investors that are prepared to hold onto them for the long-term.

Especially given its recent update which was stronger than many expected. For the first four months of FY 2019 the company has seen revenue increase 40.5% to NZ$368.4 million and net profit after tax rise 64.5% to NZ$86 million.

I’m not alone in thinking that a2 Milk Company’s shares are in the buy zone.

A note out of Credit Suisse reveals that its analysts have upgraded the fast-growing company’s shares to an outperform rating with a NZ$12.25 (A$11.50) price target. This price target implies potential upside of over 16% based on its last close price.

According to the note, the broker was pleased with a2 Milk Company’s strong start to FY 2019. It was particularly impressed with its increasing market share in the ANZ region and the continued progress being made by its infant formula segment in the China market.

In addition to this, the broker sees the pullback in its share price since August as a buying opportunity.

I completely agree with this view and see a2 Milk Company as a great option along with Bellamy’s, which has also been dragged notably lower over the last two to three months.

As well as a2 Milk Company and Bellamy's, I think investors ought to check out these blue chip growth shares with bucketloads of potential.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2019."

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!