Blood product and vaccine manufacturer CSL Limited (ASX: CSL) is something of an unusual business. While the stock has recorded a staggering 2,177% return since listing on the S&P/ASX ALL ORDINARIES in the 1990s, it spent most of the last decade hovering around $40 per share.
The advent of online brokerage and the rise of super funds, as well as continued strong performance, share buybacks, and several acquisitions sent the company back above $100 this morning for the third time this year. CSL is now within inches of its all-time high of $102.43 per share and investors must be wondering: Where to next?
That question is difficult to answer, although it seems that the company's strong balance sheet, international earnings and penchant for share buybacks will only cause the price to rise over time. Continued high expenditure on Research and Development (R&D) is also likely to result in new products and increased sales in the future, given CSL's growth pipeline.
While investors may be put off by the $100 price tag, this represents a Price to Earnings (P/E) ratio of 25 which is higher than the S&P/ASX 200 average but not exorbitant when it comes attached to a company of the calibre of CSL.
A weak Australian dollar and extensive global diversification are huge draw-cards, and indeed in these respects CSL is hard for Australian investors to match without buying Exchange Traded Funds (ETFs). I wouldn't be surprised to see CSL head higher over the next 12 months as the full benefits of a weaker dollar and the Novartis acquisition are felt.
