The A2 Milk Company Ltd (ASX: A2M) share price has been rocketing higher in recent years. While the S&P/ASX 200 Index (ASX: XJO) is down 12.64% in the last 5 years, a2 Milk shares are up more than 3,000%.
It’s easy to think that you’ve missed the boat with a growth share like a2 Milk. But I think the coronavirus pandemic presents a unique opportunity to buy a2 Milk shares in 2020.
Why this ASX 200 dairy share has skyrocketed
The group’s share price growth has been built on strong earnings growth – a2 Milk’s half-year revenue surged 32% higher to $806.7 million at 31 December 2019 while net profit was up 21% to $184.9 million.
Those are some pretty impressive recent growth numbers, and a quick look at a2 Milk’s 2015 full-year earnings shows just how well the Kiwi dairy group has done in the last 5 years.
a2 Milk reported $154 million in revenue and a net loss after tax of $1.14 million in FY 2015. The group reported earnings per share (EPS) of negative 33 cents in 2015, compared to positive 25.2 cents in 1H 2020.
The group’s shares have been rocketing and it has managed to turn that success into a more mature business model. a2 Milk now has strong earnings from liquid milk, infant nutrition and other nutrition segments.
In fact, the group is set to expand into Canada after announcing a landmark deal with Agrifoods Cooperative in March. That’s good news for shareholders, but can you still get in on the action?
Is there still time to buy a2 Milk shares?
It’s easy to think that the a2 Milk share price growth is done and dusted. However, earnings are still rising and the ASX 200 dairy group’s share price is beating the bear market.
The coronavirus pandemic could well boost liquid milk sales for the group. Similarly, international expansion could open up a whole new market to a2 Milk.
It’s hard to bet against a company that has delivered so much to shareholders. The market is volatile and it could be a good time to buy a2 Milk shares while many are selling.
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Motley Fool contributor Ken Hall 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.