The Wattle Health share price is up 95% in a week

The Wattle Health Australia Ltd (ASX:WHA) share price has been on fire and has almost doubled in the space of a week…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Wattle Health Australia Ltd (ASX: WHA) share price has been the best performer on the All Ordinaries index on Monday.

In afternoon trade the infant formula company's shares have rocketed 36% higher to 74 cents.

This latest gain means that Wattle Health's shares have now gained a remarkable 95% in the space of a week.

Why has the Wattle Health share price almost doubled in value in a week?

Investors have been scrambling to get hold of the company's shares since rival Bellamy's Australia Ltd (ASX: BAL) received a takeover approach.

Last week Hong Kong-listed China Mengniu Dairy Company offered $13.25 per share offer, which values Bellamy's at approximately $1.5 billion.

This may have led to some investors believing that Wattle Health's shares were undervalued in comparison to peers such as A2 Milk Company Ltd (ASX: A2M), Bellamy's, and Bubs Australia Ltd (ASX: BUB).

Though, with the company reporting a 30.5% decline in revenue in FY 2019 to just $1.1 million, its current market capitalisation of $142 million looks hard to justify. This is still the case even when accounting for its proposed acquisition of CNCA accredited dairy manufacturer, Blend & Pack.

Alternatively, some investors may believe that Wattle Health is a potential takeover target along with Bellamy's. Though, once again, I would be surprised if this were the case given the limited sales of its Uganic infant formula range.

At this stage the Uganic brand has limited brand power and is likely to require a material marketing budget if it is to challenge the big boys in the lucrative China market.

In light of this, I would suggest investors stay well clear of Wattle Health's shares. I suspect that once the momentum drops, there's a very good chance they will come crashing back down to earth with a bang.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 9 January 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Three happy multi-ethnic business colleagues discuss investment or finance possibilities in an office.
Financial Shares

The IAG share price soared 50% in 2024! Here's how

IAG shares smashed the benchmark returns in 2024. But how?

Read more »

Best Shares

Which ASX 200 large-cap shares outperformed their peers in 2024?

We reveal the 16 best ASX 200 large-cap stocks for share price growth last year.

Read more »

Three happy girls on jumping motion with inflatable mattresses at the beach.
Share Gainers

3 ASX All Ords shares leading the charge in 2025

These ASX All Ords shares have soared 16% to 37% already in 2025.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Insignia, Rio Tinto, St Barbara, and Structural Monitoring shares are rising today

These shares are ending the week on a positive note. But why? Let's find out.

Read more »

A boy stands firm on a rocky cliff holding a rocket in each hand and looking up toward the sky, anticipating flying into space.
Small Cap Shares

2 ASX small-cap shares rocketing 35% to 54% today

Two soaring ASX small-cap shares are setting the bar high on Friday.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Arcadium Lithium, Bellevue Gold, Catalyst Metals, and Northern Star shares are rising today

These shares are having a good session on Thursday. But why? Let's find out.

Read more »

A group of people at a party look upwards to the camera as they celebrate the rise of ASX value shares
Share Gainers

16 ASX shares that doubled in value last year

There were multiple ASX All Ords stocks that delivered double-or-more share price growth in 2024.

Read more »

A woman blows what looks like colourful dust at the camera, indicating a positive or magic situation.
Share Gainers

Why Deterra, DroneShield, Regis Resources, and West African shares are storming higher

These shares are having a strong session on hump day. Why are investors buying them?

Read more »