The Australian share market is home to a good number of high quality companies with strong business models.
Among the best of them are arguably the shares listed below. Here's why these ASX shares could be quality options for investors right now:
CSL Limited (ASX: CSL)
The first ASX share to consider is CSL. While this leading biotechnology company would be a top option at most times, now appears to be a particularly good time to make an investment. This is due to a recent and sharp pullback in the CSL share price.
This weakness has been driven by plasma collection headwinds caused by the pandemic. The good news is that increased demand for flu vaccines from the Seqirus business looks set to offset much or even all of this. And with plasma collections expected to improve once the pandemic passes, CSL appears well-placed for growth once conditions ease.
This should be supported by its lucrative R&D pipeline, which is filled with a number of potentially lucrative therapies that could be launched in the not so distant future. One of those is Clazakizumab. It is a humanised recombinant monoclonal antibody targeting interleukin-6 for the potential treatment of chronic active antibody-mediated rejection. This is the leading cause of long-term rejection in kidney transplant recipients. If successful, peak sales are estimated to be US$5.4 billion per annum.
Citi currently has a buy rating and $310 price target on its shares.
Xero Limited (ASX: XRO)
Another option to consider is Xero. This cloud-based business and accounting platform provider has been growing strongly over the last few years.
This has been driven by the shift to the cloud, its international expansion, acquisitions, increasing revenue per user, and its evolution into a full service solution.
The good news is that these same trends look set to underpin further strong growth over the next decade. This should be supported by its burgeoning app ecosystem, which Goldman Sachs is incredibly positive on.
According to a note, the broker estimates that Xero has a core total addressable market (TAM) of NZ$14 billion across its key markets. However, if it can successfully broaden and monetise its app ecosystem and expand into new geographies, Goldman believe it would open a further NZ$62 billion in TAM. As a result, it believes Xero has "a multi-decade runway for strong revenue growth."
Goldman Sachs has a buy rating and $153.00 price target on its shares.
