This is why a2 Milk Company Ltd (ASX:A2M) and this ASX 50 share have been named as ones to buy right now…
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The S&P/ASX 50 index is home to 50 of the largest listed companies on the Australian share market. This means the index is home to many of the highest quality and most well-known companies that the ANZ region has to offer.
Two ASX 50 shares that are highly rated are listed below:
a2 Milk Company Ltd (ASX: A2M)
The first ASX 50 share to look at is A2 Milk Company. It is a New Zealand-based infant formula and fresh milk company which has been growing its earnings at a quick rate over the last few years. This has been driven by strong demand for its infant formula. This has particularly been the case in the China market and through the daigou channel.
Unfortunately, the pandemic has impacted the latter channel greatly this year. With no Chinese tourists hitting Australian shores, sales in this channel have collapsed and are weighing heavily on its performance and recently led to a guidance downgrade.
Pleasingly, management appears optimistic that this is a short term headwind and expects the channel to rebound when trading conditions return to normal. It also notes that demand in China remains strong and the company continues to grow its market share in Mother and Baby stores.
One broker that believes it is worth sticking with a2 Milk Company is Morgans. Following its guidance downgrade, the broker put an add rating and $12.20 price target on its shares.
CSL Limited (ASX: CSL)
Another ASX 50 share to look at is CSL. This biotherapeutics giant could be a great long term investment option due to the quality of its CSL Behring and Seqirus businesses. CSL Behring is the biotech business behind immunoglobulins products such as Privgen and Hizentra, and haemophilia products Idelvion and Afstyla. Whereas the Seqirus business is the second-largest player in the influenza vaccines industry and is assisting with the development and manufacture of a COVID-19 vaccine.
Although the pandemic is causing headwinds for plasma collections and increasing the production costs of immunoglobulins, strong demand for flu vaccines looks set to offset this. So much so, CSL continues to forecast profit growth in FY 2021. It is guiding to a net profit after tax of approximately US$2.170 to US$2.265 billion in constant currency, which implies growth of 3% to 8%.
Looking further ahead, CSL appears to be in a strong position for growth thanks to its current product portfolio and its significant investment in research and development (R&D). In FY 2021, CSL is expecting to invest approximately US$1 billion in its R&D activities. This should ensure its pipeline remains full of potentially lucrative therapies and keeps the company at the top of the game over the long term.
Analysts at UBS are positive on the company and have a buy rating and $346.00 price target on its shares. This compares to the current CSL share price of $287.99.
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*Returns as of June 30th
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.