Are these 2 ASX health companies the next CSL Limited?

Pro Medicus Limited (ASX:PME) and Cochlear Limited (ASX:COH) could be the next CSL Limited (ASX:CSL).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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

CSL shares
Source: Google Finance

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.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. You can follow him on Twitter @OwenRask. 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »