from the motley fool Clover Corporation Limited (ASX: CLV)...

from the motley fool
Clover Corporation Limited (ASX: CLV)
Clover Corporation has a market cap of about $259 million. It is engaged in the business of the refining and sale of omega-3 oils used in infant formula, supplements, and medical foods. As a mostly B2B business rather than a consumer brand-centric business, I think it represents a less risky play for investors than the pure infant formula businesses such as Bellamy’s Australia Limited (ASX: BAL) and Bubs Australia Ltd (ASX: BUB).
Clover had a cracking results season which didn’t seem to attract much attention. Revenue increased by 32% to $62.9 million and net profit increased by 109% to $7.6 million. The company also finished the financial year with a strong balance sheet and holding about $7.9 million in cash.
What I really like about Clover is the growth opportunities. The EU has passed legislation that all infant formula sold within its borders by 2020 must contain a prescribed minimum level of Omega 3. This provides Clover with a massive opportunity together with their investments in new products and manufacturing facilities.
Clover Corporation shares are trading at $1.58 on a PE of about 34 compared to Bellamy’s of 27 – so it is not cheap. However, it’s Price Earnings to Growth (PEG) ratio is about 1 so I don’t think the company is overvalued given its potential.