In the last five years CSL Limited’s (ASX: CSL) share price has risen by 242%. This is ahead of the performance of the S&P/ASX 200 (Index: ^AJXO) (ASX:XJO), which is up 30% in the same time period. This may lead investors to question whether it is now too late to buy CSL. However, I believe that it offers further capital gains in the medium to long term.

Consistent returns

CSL’s earnings have risen at an annualised rate of 14.1% during the last 10 years. This highlights the consistency and stability which the company offers. Even though the outlook for the global economy is uncertain thanks to a slowing China, Brexit and US interest rate rises, CSL offers a resilient financial future.

CSL enjoys a low cost of production versus rivals. That’s because CSL has invested heavily in new manufacturing facilities. It also has superior intellectual property compared to peers thanks to its investment in innovation. For example, it has spent US$2.3 billion on R&D in the last five years. This provides it with a relatively wide economic moat which reduces its risk profile.

Growing target market

The market for healthcare services is likely to grow rapidly over the long term. A key reason for this is a forecast increase in world population from 7.3 billion to 9.7 billion between today and 2050. Alongside this is an expected increase in wealth across emerging markets.

For example, in China and India GDP per capita is forecast to rise by 38% and 22% respectively over the next four years. This combination of higher demand and greater affordability of healthcare should increase the size of CSL’s potential customer base.

An improving business

CSL’s purchase of Novartis’ influenza vaccine business could boost the company’s earnings in the medium term. It is forecast to break even in 2018 and in my view it has a bright future due to CSL’s track record of process improvements. Continued optimisation of the division is forecast to drive Seqirus’ sales to US$1 billion by 2020.

Further, CSL has made progress in recent years on expanding the indications of its products and also on improved formulations of immunoglobulin-based therapies. Its expansion into emerging markets improves its geographic spread, which reduces its risk profile and increases its growth potential.

Valuation

CSL is expensive when compared to the ASX. It has a P/E ratio of 31.1 versus 17.3 for the index. However, when compared to sector peers Ramsay Health Care Limited (ASX: RHC) and Cochlear Limited (ASX: COH), CSL’s valuation has appeal. For example, Ramsay has a P/E ratio of 33.9 and Cochlear has a P/E ratio of 39.5.

Given CSL’s bullish growth prospects and consistent performance, I feel that its shares will continue to rise. Therefore, in my view it isn’t too late to buy CSL.

How 1 Man Turned $10K Into Over $8 Million

Discover how one man turned a modest $10,600 investment into an $8,016,867 fortune. Learn more about this man and how you can start down the path toward financial independence. Simply click here to learn more.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor Robert Stephens has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.