Is it too late to buy CSL Limited shares?

Over the last 12 months the CSL Limited (ASX: CSL) share price has been one of the best performing large caps with an impressive gain of approximately 32%.

This latest gain means that the biotherapeutics company’s shares have now provided investors with an average total return of 18.3% per annum during the last ten years.

To put that into context, if you had invested $25,000 in CSL’s shares ten years ago that investment would have grown to be worth approximately $134,000 today.

Is it too late to buy CSL’s shares?

Whilst I don’t think it is too late to buy CSL’s shares, I wouldn’t necessarily expect them to race 32% higher again over the next 12 months.

At the current price I believe the company’s shares have baked in all of FY 2018’s growth and are about fair value now.

In light of this, I think there may be limited upside in the short-term, after which I would expect its shares to rise in-line with its future earnings growth.

The good news here is that brokers are very positive on its future earnings growth potential.

In fact, a note out of Credit Suisse last week revealed that its analysts expect the company to deliver earnings per share of approximately $4.65 in FY 2018 and $5.32 in FY 2019. That would mean earnings growth of around 14.5% next year.

The broker expects CSL’s Seqirus vaccine business to play a key role in this growth and appears to have been impressed with its performance in the first-half of FY 2018.

I would have to agree with Credit Suisse on this and believe that its fledgling Seqirus business is destined to be a major contributor to the company’s earnings in the future after initially operating at a loss.

All in all, I expect Seqirus will help the company continue to grow earnings at an above-average rate for a long-time to come, allowing its shares to continue their impressive outperformance.

Because of this I would rate CSL as my number one pick in the healthcare sector ahead of the likes of Nanosonics Ltd. (ASX: NAN) and ResMed Inc. (CHESS) (ASX: RMD).

Finally, here are three more up and coming growth shares which I think could provide strong returns like CSL in the future.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended ResMed Inc. 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 Scott Phillips.

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