Is the CSL Limited (ASX: CSL) share price a buy?
It's been a good start to the month with the share price rising around 1.4%. However, there's some distance to go before the healthcare giant reaches the all-time high of $230 again as it did at the start of September 2018.
CSL has been a wonderful company to own over the past five years, with the share price up 180% plus a growing dividend. Its track record of investing heavily into R&D and turning that into successful products is impressive.
There are few Australian businesses that have managed to become global giants in their field. Remember when Wesfarmers Ltd (ASX: WES) and National Australia Bank Ltd (ASX: NAB) have both retreated from their Northern Hemisphere jaunts?
But, it must be said that the Australian healthcare sector as a whole is proving very adept at growing internationally. Just think of Cochlear Limited (ASX: COH), Ramsay Health Care Limited (ASX: RHC) and Nanosonics Ltd (ASX: NAN) as three examples that have also grown successfully internationally, alongside CSL.
Many analysts believe that the biotechnology company's core product, its blood plasma collection business, can grow by high single digits for a number of years into the future. That's why the company is aiming to open between 30 to 35 new collection centres this financial year.
Out of all of the blue chips like Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) and BHP Group Ltd (ASX: BHP) I believe that CSL is the most defensive and perhaps the highest-quality, although Macquarie Group Ltd (ASX: MQG) gives it a good run for its money.
Foolish takeaway
CSL is currently on an earnings upgrade cycle, it keeps making decent earnings projections and then confirms a few months later it's going to beat it. In FY19 the company is guiding between $1.88 billion and $1.95 billion of net profit, and believes it will be at the upper end of that range.
Even so, CSL is trading fairly expensively at over 29x FY20's earnings. However, if CSL can continue to grow its profit at more than 10% per annum for the next few years then it could be worth the price. And besides, the other great-quality ASX businesses just aren't trading cheaply right now – it's better to buy a good one and let it grow into the valuation in my opinion.
