The CSL Limited (ASX: CSL) share price has climbed 25.7% higher so far this year to $233.00 per share – but could it surge higher in 2020?
The Aussie biotechnology group has been a big success within the S&P/ASX200 Index (INDEXASX: XJO) but here are a few reasons why I think it’s the best buy in the ASX Healthcare sector in 2020.
CSL is a big fish on the ASX
CSL currently boasts a market cap of over $100 billion, which makes it not just a big healthcare company but one of the biggest listed companies in the country.
This sort of size gives CSL a strong balance sheet and a big name to pursue high-risk, high-reward ventures which could payoff big time for the company and its shareholders.
As well as being the largest healthcare stock, the CSL share price has also been a top performer, outpacing the likes of Regis Healthcare Ltd (ASX: REG) and Ramsay Health Care Ltd (ASX: RHC) so far this year.
CSL has been around a long time
CSL was founded back in 1916 as a Federal Government department before being privatised in 1994 – and it has continued to go from strength to strength.
Indeed, since its privatisation the CSL share price has rocketed an astonishing 30,000% higher, which is more than a handy investment even accounting for inflation.
The company has developed operations both organically and inorganically over the last 25 years with no reason why it won’t continue to leverage its financial and technical strength in 2020 and beyond.
There are significant barriers to entry
Operating in the Aussie healthcare sector is tough business, let alone competing on a global scale with operations in the USA and Europe.
CSL operates within its own niche of human medical treatments with a strong focus on blood plasma, vaccines and genetic research.
The company recently reported a $1.92 billion net profit after tax (NPAT) in early August and paid out a dividend of A$1.48 per share to its investors – all because it knows its niche and focuses on what it does best.
CSL is forecasting a strong 2020 outlook
The outlook for FY2020 is looking good for CSL, with the Aussie healthcare giant forecasting NPAT growth of 7-10% for this financial year which is impressive by any company, let alone one of Australia’s largest.
CSL expects to report a net profit of $2.05 billion to $2.10 billion in August 2020, and I think it’d take a brave investor to bet against the CSL share price outperforming in 2020 and beyond.
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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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.