Sentiment Turning on CSL

The long overdue shake out in the markets is finally happening. All those stocks with valuations based on pure fairy dust are coming back to earth and companies with real profits and real cash flows are coming back into favour.

This in theory should make markets a little easier to read than the wacko markets of 2020 and 2021.

CSL has a history of outperforming in flat/declining markets, it has a stronger correlation to the US dollar (which has strengthened considerably recently) than nearly any other ASX stock, and operationally things are falling into place as well.....and it certainly ticks the real profits/real cashflow box.




Note the long slow weakening of the $A from 2012 to 2020 that coincided with the long steady rise of the CSL share price. It wasn’t just about that of course ....CSL was going great guns operationally as well ....but the weakening $A was certainly a tail wind for the $A share price.

I’m still not convinced CSL will ever be a flying growth stock again but I think it’s a nice defensive play at the moment - I’ve gone overweight on this stock recently and will review that position if it gets to the $300-$320 range.

After a couple of years of underperformance CSL might just deliver some outperformance in 2022.