Could CSL stock be a millionaire-maker at $261

Does the exceptional biotech company still harness the power to make an investment today worth a million in the future?

| More on:
A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Those fortunate enough to have invested $10,000 in Altium Limited (ASX: ALU) over 11 years ago are now sitting on a holding worth more than $1 million. However, investors today might hope to find a millionaire-maker in a more established part of the stock market, such as CSL Limited (ASX: CSL).

The biotechnology giant is no stranger to generating enormous returns for its shareholders either. Since November 2012, the share price of the plasma products maker has risen 442% — exceeding the S&P/ASX 200 Index (ASX: XJO) by a mountainous 386%.

It makes one wonder… could CSL shares be a way of achieving the millionaire milestone without the violent ups and downs?

Going big on a blue-chip

It goes without saying $1 million is a tonne of money. To obtain such a large sum, one usually needs to invest a handsome amount from the outset. Even with $10,000 of hard-earned cash, a 10,000% increase (100 times) return is required to reach a million dollarydoos.

In 2022, the average savings for a man between 30 and 49 years of age was $27,005. Meanwhile, the average savings for a woman of the same age bracket came in at $24,081.

This would imply that even if someone were to plough all their savings (~$25,000) into one stock — which is not advisable — a million dollars remains a 40-fold increase away. It might be a tall order, but it's not out of the realm of possibilities.

In the last 20 years, there have been 10 ASX-listed companies that have experienced a share price increase greater than 4,000%, including:

  • Objective Corporation Ltd (ASX: OCL) – 4,159%
  • Webjet Limited (ASX: WEB) – 5,103%
  • Australian Ethical Investment Ltd (ASX: AEF)

The question then becomes, can the CSL stock price achieve this feat from here?

What would be needed?

Today, CSL shares are fetching $261 apiece. A 40-fold return would see the CSL stock price reach $10,440 — assuming it didn't undergo any stock splits.

This alone doesn't really mean much. Instead, the company's market capitalisation is far more tangible.

The vaccine and drug company is currently valued at $124.1 billion. As such, a millionaire-creating CSL market cap would be $4,964 billion. For context, the most valuable listed company in the world right now is Apple Inc (NASDAQ: APPL) at $4,448 billion.

Assuming CSL traded on a price-to-earnings (P/E) ratio comparable to Apple (31 times), the biotech company would need to produce $160 billion in after-tax earnings if it reached a similar value. That would mean CSL's earnings need to grow nearly 73 times greater than its $2.194 billion in FY2023.

Can CSL stock deliver?

The largest listed pharmaceutical company in the world at present is Eli Lilly and Co (NYSE: LLY). In the latest trailing 12-month period, this behemoth generated nearly US$5 billion in profits.

It's hard to imagine a future where CSL makes 32 times more than the biggest pharma company globally.

Never say never… but investing is a game of probabilities — and I'd say the odds of the CSL stock price increasing 40-fold from here are slim.

In fact, despite its already meteoric run, I'd pick Altium over CSL to be another 40-bagger from here.

Why? Two reasons… the law of large numbers and the remaining runway for growth. As a PCB design software provider, Altium may still have vast opportunities ahead as the world continues to integrate digital components into more items.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Australian Ethical Investment, CSL, and Objective. The Motley Fool Australia has recommended Australian Ethical Investment, CSL, and Objective. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares

1 attractive ASX growth stock for 2024 and beyond

This business is building an exciting future.

Read more »

Young girl starting investing by putting a coin ion a piggybank while surrounded by her parents.
Investing Strategies

2 no-brainer ASX 'beginner' stocks I'd buy

These would make a great core for a starter portfolio, I think, but really that should also be positive for…

Read more »

A young woman wearing a silver bracelet raises her sunglasses in amazement, indicating positive share price movement in jewellery shares.
Investing Strategies

I'd need this many Lovisa shares to aim for passive income of $10k a year

The jewellery retailer is in a unique category in the ASX, so this is how you can take advantage to…

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares

One ASX share to buy today to ride the 30% forecast surge in the S&P 500

If these experts have it right, the S&P 500 is set to continue rewarding investors with outsized gains.

Read more »

Woman relaxing on her phone on her couch, symbolising passive income.
Dividend Investing

$5k to invest buys me 700 shares in these 2 ASX stocks for a second income!

You don't need a lot of money to start a steady flow of cash flowing into your bank account.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
Value Investing

3 Australian value stocks to buy right now

I think these stocks are capable of beating the market.

Read more »

A man eases back onto his sofa, happy with the relaxed vibe from his furniture.

This is the best ASX share buy I've made in my superannuation fund

This stock has been an amazing investment so far.

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.

2 ASX shares under $50 new investors can buy confidently

I like these stocks for both growth and dividend potential.

Read more »