The Wattle Health Australia Ltd (ASX: WHA) share price has been the best performer on the All Ordinaries index on Monday.
In afternoon trade the infant formula company's shares have rocketed 36% higher to 74 cents.
This latest gain means that Wattle Health's shares have now gained a remarkable 95% in the space of a week.
Why has the Wattle Health share price almost doubled in value in a week?
Investors have been scrambling to get hold of the company's shares since rival Bellamy's Australia Ltd (ASX: BAL) received a takeover approach.
Last week Hong Kong-listed China Mengniu Dairy Company offered $13.25 per share offer, which values Bellamy's at approximately $1.5 billion.
This may have led to some investors believing that Wattle Health's shares were undervalued in comparison to peers such as A2 Milk Company Ltd (ASX: A2M), Bellamy's, and Bubs Australia Ltd (ASX: BUB).
Though, with the company reporting a 30.5% decline in revenue in FY 2019 to just $1.1 million, its current market capitalisation of $142 million looks hard to justify. This is still the case even when accounting for its proposed acquisition of CNCA accredited dairy manufacturer, Blend & Pack.
Alternatively, some investors may believe that Wattle Health is a potential takeover target along with Bellamy's. Though, once again, I would be surprised if this were the case given the limited sales of its Uganic infant formula range.
At this stage the Uganic brand has limited brand power and is likely to require a material marketing budget if it is to challenge the big boys in the lucrative China market.
In light of this, I would suggest investors stay well clear of Wattle Health's shares. I suspect that once the momentum drops, there's a very good chance they will come crashing back down to earth with a bang.
