No business among the S&P/ASX 200 (INDEXASX:XJO) has managed to crack the magic $100 per share mark in the more than five years since the GFC lows in the autumn of 2009. This despite an extended bull market lifting the overall ASX 200 Index around 60% since then.
If there is a company to crack a century in the next five years, which will it be? I've identified several contenders and provided some unofficial odds as to their chances of winning the race to $100 a share. Any victor should outperform while delivering big returns to shareholders, so let's look at the form and consider which is the business to back.
Rio Tinto Limited (ASX: RIO): Current share price: $66.30. Unofficial odds to reach $100 first: $1.90.
The giant miner is now the outright favourite after posting some spectacular half-year results on Thursday afternoon. Underlying earnings were up 21% on the corresponding half as iron ore production growth met with heavy cost-cutting to deliver big profit growth. Traders reacted to the news by pushing shares in Rio's London Stock Exchange listing, Rio Tinto plc (LON: RIO), up around 2% in morning trade.
All this in a half-year characterised by lower prices for its key iron ore product. If Chinese growth and income levels perform better than expected over the next few years Rio may return to a $100 mark it last reached back in September 2008.
Commonwealth Bank of Australia: (ASX: CBA) Current share price: $81.10. Unofficial odds to reach $100 first: $3.50.
There's been no stopping CBA's rise on the back of low cash rates supporting mortgage demand and investor appetite for its fully franked dividends. CBA remains the most expensive of the big four banks on most metrics though, including forward price-earnings ratio.
However, its shares would only need to put on another 23% or so to reach $100 each. Its best chance of getting there first are further cuts to the Reserve Bank's cash rate, cost efficiencies and growing net interest margins.
CSL Limited (ASX: CSL) Current share price: $64.08. Unofficial odds to reach $100 first: $8.
Biopharmaceutical company CSL has seen its shares double in value in under three years to reach more than $70 as recently as last month. The types of life-saving medical products it develops and sells for blood disorders as well as viral and bacterial diseases means it has competitive advantages and strong pricing power.
The first step in its dance to $100 would likely involve a blockbuster new product in an under-served area. The most likely candidate is the group's ongoing clinical research into Alzheimer's and how to slow cognitive decline by using its core immunoglobulin therapy effectively. Even if CSL doesn't win the race to $100 at current prices it looks a solid long-term bet.
Sirtex Medical Limited (ASX: SRX). Current share price: $18.65. Unofficial odds to reach $100 first: $40.
Long-shot Sirtex might seem some way off the $100 mark at current prices, but it's hoping that its innovative radiation therapy used to treat cancerous liver tumours will catapult it to global stardom.
Sirtex is currently conducting multiple clinical trials aimed at proving the efficacy of its therapy in treating early forms of liver cancer, and potentially for a wide range of other common cancers. If able to translate clinical trial success into a quantum leap in revenues the current market value of just over $1 billion could one day hit the approximate $5 billion mark required to crown Sirtex a shock winner in the race to $100.
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