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Motley Fool

It has been a reasonably disappointing start to the week for the a2 Milk Company Ltd (Australia) (ASX: A2M) share price.
In early afternoon trade the dairy company’s shares are down 2.5% to $7.34.
Should you buy the dip?
With no news out of the company today, I feel its decline is likely to be a case of profit taking. This could make it an opportune time to snap up shares, just as long as you are prepared to make a patient buy and hold investment.
While in the short-term I wouldn’t be too surprised to see its shares trade sideways, I think there is still significant upside potential for its shares in the long-term. Especially if its sales growth continues at a similar pace to what it has achieved so far in FY 2018.
According to its annual general meeting update, for the first four months of FY 2018, a2 Milk delivered a 68.9% increase in revenue and a 120.8% increase in EBITDA on the prior corresponding period.
The catalyst for this was of course infant formula sales into China. Pleasingly, despite its rampant growth in the lucrative market, it still holds just a paltry 3.5% value share. I believe the company will be able to grow its share meaningfully over the next few years, providing it with bumper top line growth.
In light of this, I would suggest investors choose a2 Milk ahead of infant formula rivals Bellamy’s Australia Ltd (ASX: BAL) and Bubs Australia Ltd (ASX: BUB).