Why did the A2 Milk (ASX:A2M) share price have such a great FY22 first quarter?

We take a look at A2 Milk shares over the past quarter…

| More on:
girl and boy drinking milk

Image source: Getty Images

Here on the Fool, we’ve recently been taking a look at how some of the major S&P/ASX 200 Index (ASX: XJO) shares have gone over the most recent quarter. That would be the first quarter of the 2022 financial year (FY22), which ran from 1 July to 30 September. Over this period, the ASX 200 had a rather lacklustre performance but still managed to eke out a gain of roughly 0.26%. So how did the A2 Milk Company Ltd (ASX: A2M) share price go over this period? That’s what we’ll be checking out today.

How did the A2 Milk share price perform over the quarter?

So A2 Milk started off FY22 at a share price of $6 on the dot. By the time September wrapped up, this dairy company finished the quarter at a price of $6.24 a share. That means this company officially recorded a gain of 4% for the quarter in question. That represents a significant outperformance against the broader ASX 200.

Of course, that metric tells us little about the experience A2 Milk shares actually had over the quarter. On the above number, it appears, this company had a very successful 3-month period.

But over this period in question, we saw A2 Milk shares reach highs of $7.20 a share in early July, as well as lows of $5.36 a share by mid-September. That gap represents a difference of almost 35%, so it’s safe to say this company had a wild ride, despite the bookend figures.

So where to start with what happened for A2 over the quarter just passed? There was a lot going on with this share, as you might gather from the volatility we discussed earlier.

Brokers, results and a takeover…

It’s worth pointing out that brokers have been particularly divided when it comes to A2 Milk. We saw a wide range of brokering views come out over the quarter just gone. These ranged from an ‘underperform’ rating and a 12-month share price target of $5.50 from Credit Suisse, to a ‘buy’ rating and a price target of $7.70 from Bell Potter. This might have been influencing investor sentiment over the quarter.

But we also had a veritable deluge of other news. Firstly, we had rumours that the global food giant Nestle was potentially considering an acquisition bid for the company, possibly due to its depressed share price. As we covered at the time, Nestle was reportedly “taking a close look at A2 Milk”, but was waiting to see what the company’s FY21 results looked like. This gave the company’s shares a boost.

Then there were A2’s FY21 full-year results, which came out back in late August. These initially were not well-received by the market, with the A2 share price falling 10% or so on the morning of their release.

All of these events may have contributed to the wild ride A2 Milk shares had over the quarter just gone. We will have to wait and see what this quarter brings us. So far at least, it’s been more of the same.

At the time of writing, the A2 Milk Company share price is sitting at $6.96, up a very healthy 5.78% for the day so far. At this share price, A2 Milk has a market capitalisation of $4.31 billion.

Should you invest $1,000 in A2 Milk right now?

Before you consider A2 Milk, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and A2 Milk wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Sebastian Bowen owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Consumer Staples & Discretionary Shares