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Is the CSL Limited share price still in the buy zone?

Credit: US Army RDECOM

Much to the delight of its shareholders, the CSL Limited (ASX: CSL) share price has been one of the best performers on the market this year.

Year-to-date the biotherapeutics company’s shares have put on a gain of over 37%.

Can the run continue?

While I think CSL’s run can continue, I do think it is approaching fair value now so the upside potential for its shares may be somewhat limited in the short-term.

After all, based on its FY 2018 forecast for net profit after tax in the range of US$1,480 million to US$1,550 million, I estimate that CSL’s shares are changing hands at approximately 31x forward earnings.

But that doesn’t mean you shouldn’t invest today. In my opinion CSL is up there with Ramsay Health Care Limited (ASX: RHC) as one of the highest quality companies in Australia and a great long-term buy and hold investment option.

That’s because with demand for its immunoglobulin and specialty products growing strongly, its fledgling Seqirus influenza business close to being profitable, and margins expanding, I feel CSL could deliver above-average earnings growth for the next decade.

All in all, I believe this puts CSL’s shares in a strong position to outperform the local share market over the next ten years.

Just like they did over the previous ten years when they provided an average annual total return of 16.3% per annum.

As well as CSL, I think these top shares could be great buy and hold investment options.

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Motley Fool contributor James Mickleboro has no position in any of the 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.

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