Could Pro Medicus Limited (ASX: PME) and Cochlear Limited (ASX: COH) be the next CSL Limited (ASX: CSL)?
The biopharmaceutical giant CSL has quickly become one of Australia's largest and most respected companies. Let's try to find the next one!
Future ASX blue chip shares
Cochlear
Some people might argue that Cochlear is already a leading blue chip company since it is worth $8.2 billion. However, I think it has the potential to go even higher over the long run as it continues to sell its hearing aids and complementary devices to a growing global market.
Cochlear has a rich history in the industry and is known as 'the' implantable hearing aid maker. For example, when most people refer to their device they don't call it "my hearing aid thingy" or "my implanted hearing aid" — they call it "my Cochlear hearing aid". The brand is synonymous with quality.
The only issue for new investors is how they deal with the company's valuation. At current market prices, Cochlear shares change hands at 37 times their annual profits, which is a massive multiple for a large company.
However, if you are a long-term shareholder, aiming for a 10-year holding period or more, I think you could buy a small position at today's prices. Then, wait. Sooner or later, its valuation will improve.
Personally, I'm waiting for a more compelling entry point to buy Cochlear shares.
Pro Medicus
Pro Medicus is a $500 million company that is outside of the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO). However, as can be seen above, the company has performed exceptionally well.
The Melbourne-based business has created a technology that allows doctors and radiologists to send and receive medical imagery in seconds.
For example, a doctor could send his radiologist a client's X-Ray which she can view on her iPhone and diagnose the client in seconds. The technology has proven to be a hit with some of the most prominent hospitals around the world.
Foolish Takeaway
It may be a bit early to think that Cochlear and Pro Medicus could be the next CSL. However, if you are a patient long-term investor I am willing to back both Pro Medicus and Cochlear if their share prices fall.
