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Our view on CSL

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Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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    Our view on CSL

    “Thank you for the weekend report. You mentioned that we should be careful of inflation but did not say how we should watch for it or how to be prepared. What companies would benefit from a high inflation environment? I’m wondering what your thoughts are of CSL today. I bought it a few months ago with the view that they’ll be manufacturing the AstraZeneca vaccine locally but whilst it initially performed strongly it has now below what I paid for it. Also, your thoughts about the IT stocks- Xero, Altium and Appen specifically.” - Best Regards Kenneth C.

    Answer

    Morning Kenneth,

    Inflation can be recognised through a number of indicators not just the CPI itself, we feel a pick up in wage growth will probably trigger market concerns. Importantly its not just when we see clear signs of inflation but also when / if market players start to put the risk of inflation to stocks ahead of their belief that the tsunami of stimulus will continue to act like a free Put Option for the market. MM’s reports through 2021 will be watching carefully for inflation and hopefully we will keep subscribers’ proverbial finger on the pulse.

    CSL is a great company but it’s been priced for ongoing growth which is extremely hard for a $120bn business to produce when its faced by the major headwind of a rising $A due to its major overseas revenue. This is undoubtedly a top-quality business but we feel its not exciting at current levels.

    CSL
    MM is bearish CSL short-term targeting a test below $250.
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    CSL Ltd (CSL)
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