Blood plasma product manufacture CSL Limited (ASX: CSL) this morning announced a net profit of US$1.31 billion on revenue of US$5.5 billion to meet the market's expectations and cap another solid year of development.
CSL is a pharmaceutical business that develops and sells products for blood disorders, viral diseases, and other common ailments treated in the hospitals and general practitioners' surgeries of public and private health authorities worldwide.
The stock saw some price weakness over the previous three months on concerns that its competition might finally be catching up with it. However, a positive outlook statement from chief executive Paul Perrault appears to have brought investors back to the trough. Mr Perrault said: "This financial year, at constant currency, we anticipate net profit after tax to grow approximately 12% and earnings before interest and tax to grow approximately 15%." The additional investor catnip being provided with the assumption that the effect of past and current share buybacks will continue to see earnings per share grow faster than profits.
Investors have bid shares up 2.73% to $67.34 in afternoon trade, although shares are still around 7% lower than 52-week highs hit in the autumn of 2014. CSL has long been a firm favourite of the broker and analyst community and for good reason. Its ability to maintain and grow profit margins is one of its core attractions. This ability is in large part because the critical nature of the products it manufactures and sells gives it significant pricing power. While this status-quo remains, CSL is likely to remain an in demand growth stock.
On an FX-adjusted earnings per share basis (US$2.70) CSL trades on a price earnings around 23 at today's prices of $67.34. At the right price it remains one of the best options available to growth-oriented Australian investors searching for a relatively defensive stock with heavy global exposure.
The best healthcare stocks like CSL and Ramsay Health Care Limited (ASX: RHC) always seem expensive and in my opinion CSL looks a hold for now. The key to making big gains is finding the CSL of tomorrow not today! There's a little known stock we think offers much better value right now and it will be reporting its own results soon.
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