What’s Behind CSL Ltd’s 31% Climb in 2017?

By ,

One of the best performing stocks on the ASX 200 has been CSL Ltd [ASX:CSL]. The stock is up 31% year-to-date, with even more room to grow in 2017.

What makes CSL’s price climb even more amazing is their size. The company has a market cap of $59.7 billion.

The biotech behemoth is the leading manufacturer in the US$24-billion blood plasma industry. They also develop and improve various medical products and vaccines.

What has led to such amazing growth for the CSL Share Price in 2017?

The company got off to the right start by upgrading their profit early in 2017. CSL stated:

Following strong sales performance, particularly by immunoglobulins and speciality products in the most recent financial quarter, CSL expects to report NPAT [net profit after tax] of approximately US$800 million for the six months ended 31 December.

And when figures came out on 15 February, CSL even beat their upgrade. Profits totalled $806 million, increasing earnings per share by 14%.

But is this responsible for the 31% share price rise?

Not on its own. A contributing factor has also been the drove of investors moving into passive funds. According to The Australian Financial Review:

Despite total assets at BlackRock climbing to a record $US5 trillion over the past few years, their clients have been taking money away from their active managers at a fair pace.

At the end of 2013, the manager had $US317 billion that was actively managed. That’s now shrunk to $US275 billion despite the Dow Jones rising 25 per cent.

It’s a different story for the robot-backed, low-cost funds. They have been growing like topsy.

In the US a record $US429 billion flowed into index funds in 2016, pipping the previous record of $US423 billion set in 2014.

A bigger factor pumping up demand for CSL stock has been share buybacks. This has reduced the number of overall outstanding shares, and improved per share metrics.

As at its FY17 half-yearly announcement, CSL’s $500 million buyback scheme was 11% complete. And the stock could likely continue its climb if all else remains the same.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

PS: A big reason to invest in blue chips is for income. They offer big dividends. And that’s because a large portion of their income is paid out to shareholders.

However, blue chips don’t always have the best yields. Income guru Matt Hibbard has written a new report, ‘Top 5 Dividend Stocks in Australia for 2017’, all about the best Aussie dividend stocks.

Some of the stocks Matt mentions pay reliable yields of 6%, 7%, 8% and more. That’s more than 5% what you’d get on an Aussie 10-year bond for just slightly more risk.

To get your free copy of Matt’s report, click here.

About Money Morning Editorial

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the…

ASX 200 News: Vulcan, PointsBet, and CSL Updates

We examine ASX updates from PointsBet Holdings Ltd [ASX:PBH], Vulcan Energy Resources Ltd [ASX:VUL], and CSL Ltd [ASX:CSL].

CSL Share Price Spikes Higher on US$2.1 Billion Profit (ASX:CSL)

It seems even a pandemic can’t put a dampener on CSL Ltd’s [ASX:CSL] performance. The biotech superstar has defied all the odds today. Reporting a US$2.1 billion profit for the 2020 financial year. Up 17% from the year prior…

Weekly ASX Market Wrap — ANZ and Lendlease Top Movers Last Week

The past week saw the All Ords [XAO] crack the 6,000-point mark, only briefly, but it still made it through. Last week saw many companies on the market moving up in line with the broader move of the All Ords. Financials had a strong week, posting gains of 11.13%…

Could CSL Become the New Standard of Income Stocks? (ASX:CSL)

It is a little over a month since Melbourne-based biotech company CSL Ltd [ASX:CSL] officially became the largest firm on the ASX. The biotech behemoth could be poised to become a standard fixture for income investors…

RBA Rate Cuts Crowns CSL Australia’s Biggest Firm

CSL, with a market cap of $142 billion, now accounts for 8.2% of the ASX 200 Index, compared with 8.1% for Commonwealth Bank of Australia, whose market cap dropped to $140 billion as of Tuesday’s close.

ASX Blue Chip Wrap: CSL & CBA Share Price Up on Results

At time of writing, the share prices of CSL Ltd [ASX:CSL] and Commonwealth Bank of Australia [ASX:CBA] are up .82% and 2.03% respectively. CSL shares are up nearly 70% and CBA shares are up more than 17% over the last 12 months…