With the market sinking lower again following President Trump's decision to fire his secretary of state Rex Tillerson, a number of popular shares have been dragged lower.
One such example is the A2 Milk Company Ltd (ASX: A2M) share price. In morning trade the infant formula and dairy company's shares are down 1.5% to $12.83.
Should you buy the dip?
At 51x estimated full-year earnings and 30x estimated FY 2019 earnings, I think a2 Milk Company's shares are close to being fair value now based on its current growth profile.
While I wouldn't expect its shares to provide the same level of returns over the next 12 months as it has over the previous 12 months, if it continues to outperform expectations then I believe it shares have the potential to beat the market return.
I'm not alone in this view. The fast-growing company added another broker to its list of admirers this week.
According to a note out of Morgans, the broker has initiated coverage on a2 Milk Company with an add rating and a $14.40 price target.
Based on its current share price, this price target implies a potential share price return of over 12% over the next 12 months.
The broker appears to believe that a2 Milk Company is capable of continuing to deliver strong growth over next few years as it wins market share across China and other key markets.
Furthermore, Morgans thinks that the quality of its products, their premium price points, and their high margins means that the company's shares are deserving of a premium rating.
I would have to agree with Morgans on this one and think that a2 Milk Company is the best option in the industry ahead of the likes of Bellamy's Australia Ltd (ASX: BAL), Bubs Australia Ltd (ASX: BUB), and Wattle Health Australia Ltd (ASX: WHA).
