The A2 Milk Company Ltd (ASX: A2M) share price has had an impressive run in the last 5 years.
Shares in the Kiwi dairy group have rocketed 2,710.8% over that time to $18.27 per share. That means $10,000 invested 5 years ago would be worth more than $271,000 today.
Many investors would look at the a2 Milk share price and think that its growth potential is already gone. But could the dairy group’s value continue to soar this year?
Why the a2 Milk share price may continue to climb
I think conditions in the Australian and New Zealand dairy market remain quite tough. Farmgate milk prices are low and competition is as fierce as ever.
However, a2 Milk shares have continued to climb in 2020 and are up 27.8% for the year. Despite some strong sales to start the year, I think the real growth potential is in international expansion.
a2 Milk is looking to expand its iconic brand into Canada, which could open up a whole new market. While the Kiwi dairy group has had a lot of success in Asia, North America could provide a real sales boost if it can capture market share.
That could mean the a2 Milk share price heads higher if this is converted into higher earnings.
That being said, I’m not bullish enough to be buying in at $18.27 per share, particularly given the uncertainty around international trade right now.
Have any other ASX shares seen the same growth?
A2 Milk isn’t the only ASX growth share to rocket higher over this period. The Polynovo Ltd (ASX: PNV) share price has rocketed 2,700.0% to $2.52 per share.
The Aussie biotech company has gone from strength to strength in recent years, much like a2 Milk.
I think Polynovo has some strong growth prospects as it looks to expand its NovoSorb product into other healthcare and cosmetic markets.
While no one knows where Polynovo and A2 Milk shares are headed in 2020, I think both companies are well-positioned for more growth in the short to medium-term.
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- 3 star ASX shares to buy for the rest of 2020
Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia owns shares of A2 Milk. 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.
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