The CSL Limited (ASX: CSL) share price lost its status as the market darling in the latest rally, but this could be a better time to be buying the stock if Citigroup is to be believed.

Shares in the blood products pharmaceutical is trading only just above breakeven during lunch time trade at $288.87 when the S&P/ASX 200 Index (Index:^AXJO) jumped 1%.

Over the past month, CSL lost around 11% of its value while the top 200 benchmark jumped by around 9% on growing optimism that we are overcoming the COVID-19 pandemic.

From hero to zero

This marks a turn in fortunes for CSL. The stock outperformed during the height of crisis thanks to its defensive and dependable earnings while cyclical stocks like big ASX banks crashed due to their exposure to the economic downturn.

But signs that the economy is holding up better than expected triggered a rally in bank shares like Westpac Banking Corp (ASX: WBC) and National Australia bank Ltd. (ASX: NAB). This comes at the expense of CSL.

Too early to declare victory

However, Citigroup reminded investors that the global coronavirus pandemic is far from over with 5.5 million people around the world infected by the virus and more than 350,000 succumbing to it.

And those are only the official figures. The true human cost of COVID-19 is likely to be many times these numbers and things won’t return to the way they were until a vaccine is found.

This also means that the high financial toll to contain the outbreak will continue to weigh on the global economy for quite a while yet.

Vaccine may be years away

“Vaccine development has historically taken up to 10 years,” said Citi.

“Given the social and economic costs of COVID-19, governments, the pharmaceutical industry, regulators and funders are following a new “outbreak” approach to accelerate development in the hope to have a vaccine available sometime within 6-18 months.

“There is a possibility we get multiple vaccines.”

Path back to normality blocked by many obstacles

Medical experts warn that the time to get a proven vaccine is likely to be measured in years and not months. Hoping to find a cure before the end of 2020 might be wishful thinking.

“As the epidemic slows in many countries, it will become more difficult to recruit patients to conduct large scale phase 3 trials,” added the broker.

“Also, if the virus mutates significantly, it could make the development of an effective vaccine more difficult.”

But finding a vaccine is one on half of the battle. Manufacturing enough to inoculate the world’s population is the next big challenge.

Buy the CSL dip

For these reasons, it might be too early to abandon quality defensive stocks like CSL Limited. While Citi has made no changes to its earnings assumptions for the company, it upgraded the stock to “buy” from “neutral” following the pullback in its share price.

The broker’s 12-month price target on CSL is $334 a share.

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Brendon Lau owns shares of National Australia Bank Limited and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why now could be a better time to buy the underperforming CSL share price appeared first on Motley Fool Australia.

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Automotive shares listed on the ASX could be poised to boom post-COVID-19. The pandemic looks to fuel several positives for the industry. New automotive sales in Australia saw their worst month on record in April, plunging more than 48.5% for the month. The sharp fall in sales marked 25 consecutive months of falling sales in the industry.

Despite the doom and gloom, the coronavirus pandemic could see new automotive sales boom in 2020 and beyond. A recent newsletter from Auscap Asset Management highlighted the concerns of many public transport commuters. With difficulty in maintaining social distancing and the risk of being in contact with asymptomatic people using public transport, consumers may seek alternative transport.

Here are 2 ASX automotive shares that could be poised to boom post-COVID-19.

AP Eagers Ltd (ASX: APE)

The AP Eagers share price tanked approximately 74% from late February to late March in response to the coronavirus pandemic. Since then, shares AP Eagers have bounced more than 175%.

The company released a trading update in late April informing shareholders that its dealerships remained in operation. As Australia’s oldest listed automotive retail group AP Eager remains operational after reducing its cost base and reshaping its business.

AP Eagers also informed the market that they secured $122 million in working capital, putting it in a dominant position over smaller competitors. AP Eagers could also capitalise on buying distressed dealerships with a potential change in consumer behaviour fuelling new car sales.

Carsales.com Ltd (ASX: CAR)

Carsales could also receive a post-COVID boost. The company has a strong balance sheet and operational metrics, in addition to international market exposure. In response to the coronavirus pandemic, Carsales implemented cost-saving initiatives to mitigate financial impact and reduced market activity.

Carsales also waived trade customer’s fixed and variable advertising fees through April, reducing dealer’s short-term operating costs. In response, the Carsales share price has bounced more than 73% from its lows in March.

Foolish takeaway

The coronavirus pandemic will surely change certain consumer behaviours. Recent data from China has reflected growth in traffic levels and weak public transport after the country was released from lockdown. According to data from the China Association of Automobile Manufacturers, new car sales increased 4.4% year on year in April.

If Australian consumers adopt the same behaviour, we could see car sales receive a much-needed boost during 2020 and beyond. Additionally, with more traffic on Australian roads, auxiliary service operators like Transurban Group (ASX: TCL) could also be potential investment ideas for investors.  

More reading

• 3 ASX 200 shares to buy for a Goldilocks-style bounce back
• Is the Transurban share price a buy today?
• 3 quality ASX dividend shares for income investors to buy today
• The one sector that could experience a V-shape COVID-19 recovery
• Which is the best ASX entertainment media share?

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended carsales.com Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s why automotive shares could boom post-COVID-19 appeared first on Motley Fool Australia.

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