Stacking Shelves, page-254

Despite a sizeable decline from its 52-week high, the A2 Milk Company Ltd (ASX: A2M) share price has still been one of the best performers during the last 12 months.
During this time the dairy and infant formula company’s shares have risen a remarkable 160%.
Are A2 Milk Company shares still in the buy zone?
I think they are and believe investors could be rewarded handsomely by being patient and holding onto them for the long-term.
I’m not alone in thinking this way. A note out of the Macquarie Group Ltd (ASX: MQG) equities desk today reveals that its analysts are bullish on the company’s prospects.
According to the note, the broker has retained its outperform rating and $12.40 price target on a2 Milk Company’s shares. This price target implies potential upside of almost 25% from the current share price.
While this note relates to the positives around the company launching a co-branded fresh milk product in New Zealand with Fonterra (ASX: FSF) and the belief that it could accelerate a2 Milk Company’s global expansion, the broker has previous talked up its long-term potential.
This is due to its belief that the company is creating value by building a business in a category that is both disruptive and growing.
Are its shares good value?
Macquarie estimates that a2 Milk Company will achieve earnings per share of 23.9 cents in FY 2018 and then 34.2 cents in FY 2019.
Based on this estimate its shares are changing hands at approximately 29x FY 2019 earnings, which I think is good value for a company expected to grow earnings by 43% next year.
However, as we have seen this year, if its earnings growth comes in lower than expected there is a danger that its shares could take a tumble.