ASX Watch: Why has BUBs continued to Rise in 2019?

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Bubs Australia Limited [ASX:BUB] has announced it will be the first company to produce Australian-made, organic, grass-fed infant formula.

It should therefore come as no surprise that BUB has risen over 200% in less than 120 trading days.

This isn’t the first time, nor the last time, you’ll hear about BUB.

Read on and you’ll find out why…

What makes BUB so special?

You may already know the story. BUB is engaged in the production and sale of organic infant food and infant formula.

If you missed our last update on BUB, I encourage you to read it here. Once you have done that, come back and we’ll delve into why BUB’s stock shot up over 20% yesterday.

Following on from BUB’s partnership arrangements with Fonterra Australia (which will grant BUB access to organic milk powder sourced from New Zealand), the company has unveiled its latest competitive edge, which involves the release of its Australian-made, certified organic, grass-fed infant formula.

This is a significant milestone for BUB, as it is now the first company in Australia to offer this unique blend of infant formula.

The Fonterra partnership agreement runs for an initial term until 31 July 2021.

What sent the share price soaring 20% yesterday?

Surprising the market is one of BUB’s defining traits lately, and it certainly did that yesterday.

With two market announcements issued yesterday, BUB informed investors that it has confirmed two strategic partnerships.

Firstly, it has secured a key Chinese online sales channel with Alibaba’s Tmall.com. And on the home front, it has secured an equity-linked alliance with Chemist Warehouse.

In the wake of these mouthwatering updates, investors were eager to jump in, causing the shares to gap up higher at yesterday’s open.

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If BUB can continue to grow its partnerships, it will position itself as a major player in this market.

All BUB needs to do now is improve its bottom line. If these new partnerships prove beneficial, then we will see this reflected in the share price.

Just take a look at the chart.

Source: Optuma

This highlights the kind of moves you can find in the small-cap space. However, this article is not a recommendation to buy or sell BUB. It’s an update only. I hope you found it helpful.

Until next time,

Jim Rickards Signature

Jonathan Evans,
Analyst, Profit Watch


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