Shares of infant formula owner, Bellamy's Australia Ltd (ASX: BAL), have been on a hot streak in 2015.
Despite listing at just $1 slightly more than a year ago, its strong debut and an almost 500% increase since the beginning of 2015 saw Bellamy's shares surge through $10 for the first time yesterday morning.
It's been touted that Bellamy's, Capilano Honey Ltd (ASX: CZZ), and to a lesser extent Blackmores Limited (ASX: BKL), are at the leading edge of Australia's next economic boom: agriculture.
There's certainly a significant amount of merit to this long-term investment thesis. After all, China's demand for raw materials led to an unprecedented boom for West-Australian miners.
However, it's vital investors don't completely lose their marbles by getting swept up in 'the fear of missing out'.
Indeed, I wouldn't say Bellamy's valuation is 'absurd' at $10, but if you're not prepared to watch it lose 30% or more tomorrow, don't buy it today. 41x forecast profits per share isn't too high for a rapidly growing company like Bellamy's. However, it's not cheap and could be heavily sold down if speculators move onto something more exciting.
Foolish Takeaway
I have little doubt Bellamy's will be a bigger and better company in five years' time. However, although it undoubtedly has one of the best business models in the sector, it's not the only company playing in an industry expected to be carried by exponential long-term Chinese tailwinds. Recently, I highlighted five potential ASX-listed stocks worthy of further consideration.
