Do CSL shares deserve a spot in the ASX 'hall of fame'?

A fund manager reveals what makes an ASX share worthy of a place among the all-time greats.

Key points
  • The CSL share price is in the red today 
  • The biotechnology company's shares have fallen nearly 9% year to date 
  • However, a fund manager has listed the share as an 'ASX hall of famer' 

A fund manager has named the CSL Ltd (ASX: CSL) share price within an ASX hall of fame.

CSL shares are currently swapping hands at $266.05, a 0.55% fall. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.11% today.

So why has this biotechnology giant received this accolade?

A group of people in a corporate setting do a collective high five.

Image source: Getty Images

Why is CSL an ASX hall of famer?

QVG Capital has listed multiple shares in a list of 'ASX Hall of Famers' and CSL is one of them. Shares that made the cut are seen as some of the greatest ASX-listed companies of all time.

REA Group Limited (ASX: REA), Objective Corporation Limited (ASX: OCL), Aristocrat Leisure Limited (ASX: ALL), Reece Ltd (ASX: REH), Cochlear Limited (ASX: COH), Domino's Pizza Enterprises Ltd (ASX: DMP), ARB Corporation Limited (ASX: ARB), Resmed CDI (ASX: RMD), and JB Hi-Fi Limited (ASX: JBH) are also named.

Commenting on this hall of fame listing on Livewire, QVG portfolio manager Chris Prunty said:

All these companies have been at least 20-baggers with CSL and REA returning over 100x to patient shareholders.

What's clear from the data is that high returns on capital and compounding revenue growth for many years in the teens is the 'secret' to gaining access to this elite cohort.

The team at QVG listed three common characteristics of the shares that made the list. High returns on capital combined with revenue growth, margins that demonstrate pricing power or unit economics that crush the competition, and strong balance sheets.

CSL reported revenue growth of 4% in its latest half-yearly results and a net profit after tax of $1.76 billion. The EBIT margin, a measure of the profitability of the company taking into account interest and taxes, was 41.1%. The company is predicting a net profit after tax of between $2.15 billion and $2.25 billion in FY22. The company declared an interim dividend of $1.46 per share, up 8%. The CSL share price jumped more than 8% on the back of these results.

Citi has recently maintained a buy rating and placed a $335 price target on CSL shares.

CSL has been operating for more than a century and listed on the ASX in 1994.

CSL share price snapshot

The CSL share price has shed nearly 9% so far this year, while it is down 0.1% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has gained 9% in the past 12 months.

CSL has a market capitalisation of about $128 billion based on its current share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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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