The S&P/ASX 200 Index (ASX: XJO) is having a decent, if uninspiring, day of trading so far this Wednesday. At the time of writing, the ASX 200 is up by 0.34% at just over 7,479 points. But one ASX 200 share is doing far better. That would be the A2 Milk Company Ltd (ASX: A2M) share price.
A2 Milk shares are currently trading at $4.62, up a solid 0.65% so far. But earlier in today’s trading session, we saw the company hit a high of $4.71. That represented a pleasing gain of 2.61% at the time.
So why are A2 Milk shares outperforming today? After all, it’s certainly a nice change for investors after the company lost almost 12% over the past month alone.
Well, we can’t be sure. There’s been no news out of the company itself today. However, there have been some media reports of a potentially positive development for A2 Milk.
A2 Milk share price rises amid US baby formula shortage
According to a report in The Guardian this week, the United States is currently enduring a “nationwide shortage” of infant milk formula. A recent and massive recall of the Similac, Alimentum and EleCare baby formula products, owned by Abbott Laboratories, is reportedly partially responsible for the shortage. The recall was in response to a number of cases of Cronobacter bacterial infections.
As a result, “stores across the US have started to ration baby formula while some others are reporting increasing shortages”. The hardest hit US states include Minnesota, Connecticut, Texas, Louisiana and Hawaii.
Shortages of a key product that A2 Milk manufactures potentially bodes well for the company. This might explain why investors have been buying A2 shares over the course of today’s trading. That’s despite A2 Milk’s infant formula products having almost no presence in US markets, going off its latest earnings report.
At the current A2 Milk share price, this ASX 200 dairy share has a market capitalisation of $3.41 billion.
The post Why is the A2 Milk share price outperforming today? appeared first on The Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen owns A2 Milk. 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 Bruce Jackson.
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