Why has the A2 Milk share price rocketed 18% so far this month?

The former ASX 200 darling has had a ripper November.

| More on:
Young girl drinking milk showing off muscles.

Image source: Getty Images

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

Key points

  • The A2 Milk share price has lifted $5.26 at the final close of October to trade at $6.22 today
  • Meanwhile, the company has dropped plenty of news to the market
  • Most excitingly, the US FDA cleared it to offer its infant formula products in the North American nation

The A2 Milk Company Ltd (ASX: A2M) share price has been on a roll in November.

The stock has gained a whopping 18.2% since the final close of October to trade at $6.22 today. For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 5.2% in that time.

So, what's been going so right for the A2 Milk share price lately? Let's take a look.

What's been boosting the ASX 200 stock higher?

There's been a lot going on with A2 Milk over the last few weeks, and its share price has been reacting favourably.

The first announcement to drive the fresh milk and infant formula company's stock was a major one. It revealed the United States Food and Drug Administration (FDA) has allowed the company's infant formula productions to be sold in the North American nation.

Though, it likely won't be smooth sailing in the US. A2 Milk noted the market is highly competitive and its gross margins will likely be lower than average amid the higher cost of goods.

It was only days later that the company announced the beginning of its NZ$150 million (around $139 million at today's exchange rate) on-market share buyback.

The capital return activity was first flagged in August and could run for 12 months. Shares bought under the buyback will be cancelled – thereby lowering the number of shares on issue and increasing the value of those remaining.

Finally, the company held its annual general meeting (AGM) on Friday. There, it told investors its performance is tracking in line with its financial year 2023 guidance but warned volatility in currencies could impact its revenue.

It said that, if currencies remain at prevailing levels, revenue growth could end up in the low double-digits, rather than the previously forecasted high single-digits. Meanwhile, its entrance into the US market likely won't impact its earnings this fiscal year.

A2 Milk share price snapshot

This month's gain has added to the A2 Milk share price's decent 2022 performance.

The stock has lifted 12% so far this year. Though, it's still 1% lower than it was this time last year.

For comparison, the ASX 200 has fallen 5% year to date and 3% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Stock market crash concept of young man screaming at laptop on the sofa.
Share Fallers

Guess which ASX 200 stock just crashed 31% on slumping sales

The $1.3 billion ASX 200 stock is getting hammered today.

Read more »

Photo of a happy couple with their new car and car keys.
Consumer Staples & Discretionary Shares

Up 55% this year, why Macquarie believes Eagers Automotive shares can charge higher

Eagers set to capitalise as BYD’s Australian sales surge.

Read more »

Two race cars on a track at sunset.
Consumer Staples & Discretionary Shares

Down 36% in a year, this ASX 300 stock is one to watch

After a major sell-off, this high-performance cooling specialist might be gearing up for a turnaround.

Read more »

Two laughing young women hold shopping bags and ride an escalator up to another level in a Scentre Group shopping centre.
Broker Notes

3 ASX consumer sector shares to buy in July: expert

A leading expert has named its top 3 picks.

Read more »

person with large headphones looking puzzled holding their hand to their chin.
Broker Notes

Does Macquarie prefer Harvey Norman or JB Hi-Fi shares?

Both companies have market-beating long-term track records.

Read more »

Person taking out a slice of pizza from a pizza box.
Consumer Staples & Discretionary Shares

Why now is the time to buy the big dip on Domino's shares

Down 46% in a year, a leading expert forecasts brighter days ahead for Domino’s shares.

Read more »

Three people sit on safe cheering with pizza on table
Consumer Staples & Discretionary Shares

Food fight! Have Guzman Y Gomez shares outperformed Domino's since ASX debut?

Lets find out who’s topping the menu for investors

Read more »

Woman chooses vegetables for dinner, smiling and looking at camera.
Consumer Staples & Discretionary Shares

Here's the Coles dividend forecast from top analysts through to 2029

Can this defensive business provide pleasing payouts? Let’s take a look…

Read more »