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I think having a few blue chip ASX shares in your portfolio can be a good thing.

This is because they tend to be more stable than average, pay dividends, and have strong market positions. All in all, I feel these are the qualities you want for core holdings in a portfolio.

Three blue chip shares which I think also offer solid growth potential are listed below. Here’s why I think this makes them top options for investors right now:

Coles Group Ltd (ASX: COL)

The first blue chip share to buy is Coles. I think it is one of the best blue chips on the Australian share market due to its defensive qualities and solid long term growth potential. The latter is thanks to its strong market position, online growth, expansion opportunities, and cost cutting plans. Another positive with the supermarket giant is that it offers investors a reasonably attractive dividend yield. Based on the current Coles share price, I estimate that it will provide a 3.1% fully franked dividend yield in FY 2021.

CSL Limited (ASX: CSL)

Another blue chip to consider buying is this biotherapeutics giant. I think CSL is the highest quality company on the Australian share market and well-positioned to generate solid returns for investors over the next decade. This is thanks to its lucrative and in-demand therapies that are treating conditions which have no real alternative treatments. In addition to this, the company has an extremely promising pipeline of therapies under development. These have the potential to generates billions of dollars in sales in the future if all goes to plan.

Goodman Group (ASX: GMG)

A final blue chip share to consider buying is this commercial and industrial property company. I believe Goodman Group is well-positioned for long term growth due to the strength of its portfolio and future property developments. Especially given its focus on high-quality properties in key locations that it believes will deliver sustainable returns for investors. These include logistics and warehouse facilities which have exposure to the rapidly growing ecommerce market.

More reading

• Is the CSL share price a buy?
• Where to hunt for ASX dividend share income in 2020
• Why CSL, Iress, Santos, & Webjet shares are dropping lower
• After the stellar COVID-19 rebound, can ASX share prices keep rising?
• Sonic share price surges to record high as its profit results defy sceptics

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 COLESGROUP DEF SET. 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.

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I continue to believe that one of the best ways for investors to grow their wealth is to make long term investments in quality shares with strong business models and positive outlooks.

Three shares that tick a lot of boxes for me are listed below. Here’s why I think they could provide outsized returns for their shareholders over the next decade:

Altium Limited (ASX: ALU)

The first growth share that I would buy is electronic design software company Altium. Due to its key Altium Designer product and its exposure to the rapidly growing Internet of Things and artificial intelligence markets, I believe it is well-positioned to grow its revenue and earnings at solid rate over the coming years. Management certainly believes this will be the case. It remains confident the company will achieve its target of US$500 million in revenue, 100,000 subscriptions, and market domination. And while this appears likely to be a touch later than its original target of FY 2025 because of the pandemic, I’m very confident it will get there. Especially given the early success of its Altium 365 cloud-based offering and its other growing businesses such as NEXUS and Octopart.

Appen Ltd (ASX: APX)

Another growth share to consider buying is Appen. It is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. Appen has a massive team of 1 million+ crowd-sourced workers across the globe helping to improve the artificial intelligence models of many of the biggest tech companies in the world. Given the growing importance of artificial intelligence and machine learning and Appen’s leadership position in its field, I feel it is well-placed to continue growing its earnings at a strong rate in the 2020s.

ResMed Inc. (ASX: RMD)

A final growth share to consider buying is ResMed. I think the sleep treatment-focused medical device company is well-positioned for growth in the coming years thanks to its industry-leading products, growing ecosystem of connected devices, and its sizeable market opportunity. Management estimates that there are 936 million people with sleep apnoea globally and 380 million people suffering from chronic obstructive pulmonary disease (COPD). This gives it a significant runway for growth.

More reading

• Top brokers name 3 ASX 200 shares to buy today
• Is the Altium share price a buy?
• The Appen share price just soared to an all-time high. Is it a buy?
• Nextdc and 2 other thriving ASX tech shares to buy
• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%

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 and recommends Altium. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended ResMed Inc. 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.

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The Pure Foods Tasmania Ltd (ASX: PFT) share price has rocketed 144% higher so far in August. That gain represents the lion’s share of Pure Foods’ 154% share price gain since listing on the ASX on 30 April.

By comparison, the All Ordinaries (INDEXASX: XAO) has gained 3.5% in August and 12% since April 30.

Pure Food’s remarkable August share price surge comes despite Thursday’s 12% fall, likely driven by some profit taking.

At the current share price of 64 cents per share, the company has a market cap of $36 million.

What does Pure Foods do?

Pure Foods Tasmania was formed in 2015 and began trading on the ASX in April 2020.

The company’s business strategy is to acquire and develop premium Tasmanian food businesses. Today Pure Foods has acquired two businesses, held through separate wholly owned subsidiaries. Tasmanian Pate, which supplies numerous big brand chains such as Aldi, Woolworths and Costco. And Woodbridge, which produces premium Tasmanian smoked salmon and trout.

Why has the Pure Foods share price leaped 144% in August

Pure Foods shares began trending strongly higher on the first trading day of August. That followed on the release of its quarterly performance report for the quarter ending June 30, released to the market on 30 July.

The report noted that Pure Foods was on track to deliver annual revenue growth of 22% compared to the 2019 financial year. The company also noted that export sales remained firm, despite disruptions from COVID-19 and trade frictions with China. The company also announced the pending launch of its online store.

The Pure Foods share price really took off following an ASX announcement released on 6 August. That stated that Pure Foods was going to launch a new range of 3 Tasmanian Pates into 850 Woolworths stores across Australia. Those will be available from mid-October. Pure Foods estimated the addition of these 3 products would increase its sales by 35%.

Managing Director, Michael Cooper said:

This is a great credit to the team at PFT working with Woolworths to develop a first for the pate category. We believe these new products are unique and aligns with our strategy to produce great tasting premium food using 100% Tasmanian ingredients where possible.

Pure Foods’ share price has gained 72% since the announcement on 6 August.

More reading

• 3 stellar ASX growth shares to buy in FY 2021
• Medical Developments International share price tumbles on FY 2020 profit decline
• ASX 200 down 0.8%, IDP Education soars
• Charter Hall share price jumps 6% on FY20 results
• Audinate share price drops 7% as coronavirus hits FY20 earnings

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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The Medical Developments International Ltd (ASX: MVP) share price was out of form on Thursday.

The healthcare company’s shares tumbled 9% lower to $6.04 following the release of its preliminary full year results.

How did Medical Developments International perform in FY 2020?

For the 12 months ended 30 June 2020, Medical Developments International reported a 10.6% increase in revenue to $23.64 million.

This was driven by respiratory sales, which grew 61% in FY 2020 to an all-time high due to COVID-19 related purchasing, new product launches, and new pharmacy channel success in multiple markets. Respiratory sales in Australia grew 43% and sales in North America grew by 88%.

This offset a decline in Penthrox sales, which were down 8% for the full year. This compares with 6% growth in the first half. Management advised that decreased sporting and outdoor activity, as well as reduced population movements, led to softening demand in the fourth quarter within the Emergency Services market.

Nevertheless, management remains very confident on its opportunities in the Emergency Services market. It commented: “Despite the immediate headwinds experienced by Penthrox during the COVID-19 pandemic the convenience, utility and safety of the product within Emergency Services has been recognised whilst operating under difficult circumstances and we expect to emerge in a stronger position within these services.”

On the bottom line things weren’t quite as positive. The company reported a profit after tax of $0.379 million. This was down 63.5% on the prior corresponding period. Management advised that this was partly due to a higher weighting of generally lower margin medical devices sales. Also weighing on its profits was a 15% increase in operating expenses. This was a combination of increased pharmacovigilance costs and marketing expenses.

Outlook.

Management expects FY 2021 to be a very busy one for the company. Over the next 12 months it expects to complete the handback of the Penthrox EU distribution rights and aggressively pursue targeted country reimbursements, launches, and expansion activity via a direct in-market presence in the EU.

It also expects to complete the roll out of Penthrox into Mexico, Iran, Jordan and Thailand, and consolidate its record year for respiratory and further grow its device sales in Australia, the USA, Europe and elsewhere.

Looking further ahead, management appears confident on its growth outlook.

It commented: “Over the next few years our global market approvals and ‘indication extensions’ for Penthrox are expected to deliver strong growth, as will our respiratory device business. We are also making good progress with our continuous flow technology. This opportunity is significant and we are optimistic we will commercialise products from the technology.”

More reading

• Why the Medical Developments International share price jumped 14% higher today
• 3 junior ASX healthcare shares with explosive growth potential
• Why Opthea shares could offer big growth potential
• Why this underperforming ASX healthcare company could still light up the market in 2020 and beyond

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 Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International 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.

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The S&P/ASX 200 Index (ASX: XJO) dropped by 0.8% to 6,120 points.

There were a number of interesting reports today:

Idp Education Ltd (ASX: IEL)

International education business IDP Education announced its FY20 result. It said that its total revenue fell by 2% to $587.1 million. In constant currency terms, revenue dropped by 5%.

IDP Education’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 29% to $148.6 million and earnings before interest and tax (EBIT) increased by 11% to $107.8 million. Net profit after tax (NPAT) rose by 2% to $67.8 million.

No final dividend was declared but the interim dividend of 16.5 cents per share which was declared six months ago will be paid on 24 September 2020.

The IDP Education share price went up 28.5% today. It was the top performer in the ASX 200.

Webjet Limited (ASX: WEB)

Webjet also announced its FY20 result.

The travel business said that its total transaction value (TTV) fell by 21% to $3 billion. Revenue declined 27% to $266 million.

The Webjet EBITDA declined by 171% to a loss of $91.3 million. Underlying EBITDA, excluding one-offs, fell 80% to $26.4 million.

Reported NPAT dropped 338% to $143.6 million. Underlying NPAT fell 168% to a loss of $42.3 million. In FY20 it saw a number of one-off items totalling $117.7 million, of which $78 million were booked in the second half. A total of $40 million of debtors were written off, $14.6 million was associated with the closure of Webjet Exclusives and $20 million was for the impairment of intangibles relating to the closure of Online Republic Cruise.

Webjet said that it enacted a number of cost cutting measures that helped reduce costs by around 50% after COVID-19 hit.

The company is hoping and expecting that domestic travel will recover faster than international travel due to the timing of border openings.

The Webjet share price fell 12.5%, it was the worst performer in the ASX 200.

Wesfarmers Ltd (ASX: WES)

Wesfarmers announced its FY20 result today. It was pretty mixed.

There were a number of one-offs amounting to $435 million pre-tax which affected the statutory result this year. There was restructuring actions in Kmart Group, impairments in Target, as well as the industrial and safety group. Those one-off negatives were partially offset by the gains on the sale and revaluation of Wesfarmers’ Coles Group Limited (ASX: COL) shares.

Wesfarmers revealed its numbers for continuing operations, excluding the above significant items (and pre-AASB 16 to provide a like-for-like comparison).

Revenue was up 10.5% to $30.85 billion.

The ASX 200 company’s EBIT (after interest on lease liabilities) fell by 0.3% to $2.96 billion. NPAT increased by 8.2% to $2.1 billion. Bunnings was the key performer with 13.9% revenue growth to $15 billion and EBIT growth of 13.9% to $1.85 billion. 

Wesfarmers’ full year ordinary dividend was down 14.6% to $1.52. The company also declared a special dividend of $0.18 per share after the further sale of Coles shares.

Medibank Private Limited (ASX: MPL)

The private healthcare business reported its FY20 result. It said that its revenue from external customers increased by 1.7% to $6.77 billion. Premium revenue increased by 1.3%, however, the net claims expenses increased by 3.2% to $5.5 billion.

Its continuing group operating profit fell by 12.8% to $461 million after a reduction of its health insurance operating profit.

Management expenses at the ASX 200 business decreased by 3% to $543.4 million. That represented a management expense ratio of 8.3%, down from 8.7% in the prior year.

Net investment income plunged 97.7% to $2.4 million because of the huge COVID-19 related market selloff.

Continuing net profit fell 27.9% to $315.6 million driven by the lower health insurance profit and the lower net investment income.

Medibank’s FY20 total dividend payment per share was 12 cents, which was an 8.4% decline. However, its dividend payout ratio increased from 80% to 90%.

In FY21 the company is aiming to achieve market share growth and increase its total policyholders by more than 1% – assuming a flat market. It’s targeting $20 million of productivity savings in FY21 and an additional $30 million during FY22 to FY23.

More reading

• The latest ASX 200 stocks hit by broker downgrades
• Webjet share price crashes 12% lower: Is it time to buy?
• Is now a good time to buy Fortescue shares?
• Where to hunt for ASX dividend share income in 2020
• Top brokers name 3 ASX shares to sell today

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of Wesfarmers 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.

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The Charter Hall Group (ASX: CHC) share price finished the day trading 6.67% higher following the release of the group’s FY20 results.

FY20 results

Financial highlights from Charter Hall’s FY20 results included operating earnings of $322.8 million up 46.3% on the prior corresponding period (pcp). Statutory profit after tax attributable to stapled security holders was up 47% on the pcp. Additionally, the group reported distributions of 35.7 cents per share, up 6% on the pcp. 

Funds under management grew 33% to $40.5 billion at year end and $41.8 billion after the year end, representing growth of $1.3 billion.

During the period, Charter Hall was able to successfully launch new partnerships with investors and new tenant partnership funds with Telstra, BP Australia and Ampol.  

Over the last 10 years, its pre-tax operating earnings per security had a compound annual growth rate (CAGR) of 18.6% and 15.6% after tax.  However, post-tax and excluding the performance fee, Charter Hall’s CAGR comes in at 13.1% over 10 years.

Charter Hall also reported it has seen growth in its property investment portfolio, property funds management, development activity and pipeline and has maintained a strong balance sheet.

COVID-19 impact

Charter Hall’s strategy to focus on long weighted average lease expiry (WALE) assets to defensive tenants has helped limit the impact of the coronavirus pandemic.

In fact, it has seen accelerating demand for access to industrial and logistics assets which it has actively pivoted towards. Furthermore, the group is well positioned to take advantage of the opportunity to secure strategically aligned assets and portfolios.  

Outlook

Charter Hall has advised if there is no change in current market conditions, funds under management growth has already been achieved in FY21.

Assuming the COVID-19 operating environment doesn’t deteriorate, FY21 guidance is for after-tax operating earnings per security of 51 cents.

Furthermore, Charter Hall’s FY21 distribution per security guidance is for 6% growth over FY20.

The group reports momentum in sale and leaseback transactions continued to grow across corporate Australia and the group is well positioned to take advantage of this opportunity to secure strategically aligned assets and portfolios. 

About the Charter Hall share price

Charter Hall has 30 years’ experience in property investment and funds management. It has a diversified property portfolio in sectors including office, retail, industrial and logistics and social infrastructure.

The Charter Hall share price is currently trading at $12, down 3% on this time last year.

More reading

• Why the Ampol share price is lower today
• Top broker warns Afterpay and these ASX stocks could disappoint on profit results
• Goodman share price hits record high. Is it too late to invest?

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. 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.

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The Audinate Group Ltd (ASX: AD8) share price has fallen sharply after posting an underwhelming FY20 result due to COVID-19. Audinate’s share price was down 6.85% at $5.03 in closing trade today.

FY20 results are in

Audinate reported revenue of $30.3 million for the FY20, up 7.1% on the prior year.

The company saw a strong 30% increase in software revenue, largely driven by royalties from its Dante platform and retail software sales. Furthermore, gross profit margin grew to 76.6%, an increase of 2.2%.

However, a pounding from the pandemic saw Audinate slump to a net loss of $4.1 million after tax. This was a $4.8 million decline on FY19.

Major setbacks emerged in live sound equipment revenue as festivals were cancelled around the globe. This decrease was partially offset, however, by increased demand in higher education and conferencing applications.

Operating costs – primarily marketing expenses and a $3.1 million hike in staff costs – increased 15.8%.

There was also a $0.6 million one-off cost associated with the retirement of former CEO Lee Ellison. The overall impact of these factors led to a decline in EBITDA to approximately A$2.0 million. EBITDA was down by 26% compared to FY19.

However, promisingly for the Audinate share price, the company bounced back from a marked decrease in May to record consistent revenue in June and July.

Looking ahead, the company expects August revenue to maintain consistent. Nevertheless, it will need this to increase markedly if it wants to grow in FY 21.

Audinate’s balance sheet

Audinate aims to maintain its balance sheet strength after raising $40 million in an oversubscribed placement in July. With the $29.3 million already available before the equity raising, Audinate is well-positioned to deliver on its strategy and weather potential COVID-19 impacts.

The company’s cash on hand reflects an increase in operating cash flow of $4.8m and investing cash outflows of $8.8 million primarily related to software development costs. It is expected that the information tech share will continue to use the capital for research and development with potential for mergers and aquisition activities.

What’s next for the Audinate share price?

The Audinate share price may well be primed for acceleration in a post-pandemic world. This is as a result of impressive technology proliferation and huge interest in the product through online webinars.

Furthermore, despite Covid-19 headwinds, the progress of early Dante video licensees has been encouraging, suggesting that the first Dante video products will be available during FY21. This is in line with Audinate’s original expectations.

As mentioned, the company has continued to generate consistent revenue through August. However, the impacts of COVID-19 are difficult to predict with any reasonable degree of certainty. This means a wide variety of potential revenue outcomes for FY21 are possible. Accordingly, Audinate plans to update the market through FY21 in response to changes in the trading environment.

More reading

• Are these small cap ASX shares future stars?
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• 3 top ASX tech shares to buy right now
• Top ASX Stock Picks for August 2020
• 3 exciting small cap ASX shares to put on your watchlist immediately

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia has recommended AUDINATEGL FPO. 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.

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Well, 2020 has been a tough year to hold ASX shares for both growth and income. Although many ASX share prices have recovered from the lows we saw back in March, many others haven’t. And when it comes to dividend income, the picture is even bleaker. Former dividend heavyweights from the ASX banks to Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have slashed their payouts this year. And ASX dividend shares that cut their dividends aren’t normally rewarded with share price growth. So where to turn for growth and income in 2020?

Well, I think the 2 exchange-traded funds (ETFs) named below are a great start. ETFs have an advantage over individual shares because they hold a basket of different companies. If a company’s share price drops, it is proportionally sold out of the ETF (and vice-versa if a share price rises). In this way, an ETF can help capture a winner and reject a loser.

Growth and income ETFs:

1) Vanguard Australian Shares Index ETF (ASX: VAS)

This ETF from Vanguard simply tracks the largest 300 companies on the ASX, with weightings based on market capitalisation. The ASX is well-known for its tendency to yield relatively large dividend income, likely due to our unique franking system. As I flagged earlier, not all ASX shares are paying dividends in 2020.

But it’s (indirectly) for this reason that former dividend stalwarts like Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) don’t carry as much weight in VAS as they would have done last year and prior. Instead, companies like CSL Limited (ASX: CSL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) have grown to take a bigger slice of this ETF. And it so happens that all of these companies have kept their dividends intact this year.

As such, I think this diversified ETF is a great bet for both future growth and income. Currently, VAS is offering a trailing dividend yield of 4.02%, which comes partially franked as well.

2) BetaShares Nasdaq 100 ETF (ASX: NDQ)

This ETF from BetaShares looks beyond our shores, tracking the largest 100 companies in the US-based Nasdaq exchange. The Nasdaq is known to be the place where tech companies prefer to be listed on. As such, you will find most of the ‘big tech’ names at the top of its tables. Apple, Amazon.com, Microsoft, Facebook and Alphabet (owner of Google) make up the top 5 holdings.

Normally, tech shares have a reputation for being all grow, no show when it comes to growth versus income. But this ‘dot-com era’ reputation doesn’t really square with reality anymore. Apple and Microsoft are now dividend shares in their own right. And whilst Amazon, Facebook and Alphabet still don’t pay income today, other high-weighted shares in NDQ like Intel, Costco and PepsiCo do. Because of this, NDQ offers a surprisingly substantial trailing yield of 2.7% on current prices. As such, I think it’s a top investment for both growth and income right now.

More reading

• Want to own the FAANG stocks? Here are 3 ways you can
• Why this leading broker thinks the Sydney Airport share price is a buy
• 2 ASX dividend shares with yields over 6% today
• 2 fantastic ETFs for ASX growth investors to buy today
• Sydney Airport share price down slightly after raising $1.3 billion

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Alphabet (A shares), BETANASDAQ ETF UNITS, and Facebook. 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.

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Is the CSL Limited (ASX: CSL) share price a buy?

CSL is the largest healthcare business on the ASX, it’s actually the biggest business in the S&P/ASX 200 Index (ASX: XJO).

The company recently released its FY20 result which included a number of interesting talking points.

CSL’s FY20 result

In constant currency terms, which is how CSL likes to report its result, net profit after tax (NPAT) rose by 17% to US$2.1 billion and revenue increased 9%.

CSL said this result reflected solid growth in the immunogloblin portfolio. Privigen sales grew by 20% and Hizentra sales increased by 34%. There was continued growth with high patient demand for chronic conditions.

The haemophilia portfolio has successfully evolved, driven by Idelvion with sales up by 25%.

CSL also said that the transition to its own distribution model in China has been completed. That was a drag on earnings in FY20 with albumin sales down by 36% – which was in line with guidance. This Chinese transition will improve CSL’s participation in the value chain as well as allowing the company to work directly with clinicians.

The healthcare giant also said that it delivered on its product differentiation strategy with strong profit growth for Seqirus.

So far, CSL said that there has been no material revenue impact to date resulting from the COVID-19 pandemic, though the situation is “fluid and some elements are unpredictable”.

The CSL final dividend was US$1.07 per share, equating to $1.48 in Australian dollar terms. That brings the full year dividend growth to 11% in AUD terms, a total of $2.95. At the current CSL share price it has a dividend yield of around 1%.

CSL announced that clinical trials were suspended in FY20 as a COVID-19 precaution, but these trials have now recommenced.

Investing for growth

I have always been impressed by CSL’s commitment to research and development. It is continuing to invest in its pipeline of products and it’s also involved in the global effort to tackle COVID-19 with one vaccine partnership and four therapeutic candidates under investigation and development. It’s the new products that will drive future earnings. 

What I thought was interesting this year was that the company made two bolt-on acquisitions. It acquired the license rights for a haemophilia B gene therapy program, etranacogene dezparvovec which had an upfront cash payment of US$450 million with further payments for milestones and royalties. It also acquired biotech company Vitaeris which is focused on the development of a treatment for rejection in solid organ kidney transplant patients.

Despite CSL having a market capitalisation of well over $100 billion, the company has still has plenty of growth potential – it’s investing for growth. Major capital projects are underway at all manufacturing sites to support future demand and in FY20 it opened 40 new plasma collection centres in the US.

Is the CSL share price a buy today?

In FY21 CSL is expecting net profit to be in the range of approximately US$2.1 billion to US$2.265 billion. That top end of guidance would be up to 8%. CSL tends to be a bit conservative with its guidance, so I wouldn’t be surprised to see CSL beat the guidance in FY21.

Nonetheless, CSL is looking quite pricey. It’s true that people who thought CSL was expensive at a share price of $200 have missed out on a capital gain of 50%. It’s one of the few ASX blue chips that is still growing profit during COVID-19. Its investing for growth should lead to longer-term profit growth. There’s a lot to like and I’d prefer to hold it for the long-term than a resource business or bank. 

But how much should we pay for a business that isn’t growing that fast? CSL is now a healthcare behemoth – the next decade isn’t going to be as good as the last decade.

At the current CSL share price it’s trading at 39x FY22’s estimated earnings. I think there are plenty of smaller businesses with much more growth potential like A2 Milk Company Ltd (ASX: A2M) which seem like they can produce better returns than CSL at the current prices.

More reading

• Why CSL, Iress, Santos, & Webjet shares are dropping lower
• After the stellar COVID-19 rebound, can ASX share prices keep rising?
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Tristan Harrison 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 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.

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The Integrated Research Limited (ASX: IRI) share price has slumped by 13.88% today after the company released its FY 2020 financial results. The fall in the Integrated Research share price came despite the company posting its 7th year in a row of profit growth.

Integrated Research is a locally based tech company that provided solutions for unified communications, payments and IT infrastructure.

Solid revenue and profit growth

Total revenue increased by 10% to $110.9 million for Integrated Research, while total license sales revenue increased by 15% during the 12 months to $72.1 million. Over 95% of all revenue was derived overseas.

The tech company reported profit after tax of $24.1 million, which was a 10% increase on the corresponding year. This result was at the top end of guidance. It was also the seventh consecutive year that Integrated Research had seen annual profit growth.

Total expenses for FY 2020 increased by 7% to $78.2 million. A significant focus was made by Integrated Research to reduce costs in the fourth quarter as a result of the coronavirus pandemic

Integrated Research’s EBIT margin remains in a solid position, coming in at 28% for FY 2020 compared to 29% in FY 2019. Its net profit after tax margin was also healthy at 22%, the same level as recorded last year.

The company ended the financial year with a solid balance sheet. It had a net cash position of $4.7 million as at 30 June 2020.

Integrated Research achieved a number of major sales wins during FY 2020. These included major brands such as Australia and New Zealand Banking Group Limited (ASX: ANZ), BT, JP Morgan, NTT and Woolworths Group Ltd (ASX: WOW).

Multiple divisions perform strongly

The Unified Communications and Contact Centre was one of the top performing divisions for Integrated Research. Revenue totalled $59.8 million, which was an impressive rise of 17% on the prior year. Professional services revenue also grew strongly by 17% to $8.6 million.

The infrastructure division’s revenue increased by 9% to $28.7 million for FY 2020. Meanwhile, revenue for the Payments division totalled $13.8 million, which was a decline of 14%.

Commenting on the results, Paul Brandling, chair of Integrated Research, said:

IR has again delivered strong financial results for 2020 in a tumultuous global environment.  Our solutions have become even more relevant to enterprise customers and we believe the structural changes in market dynamics are an opportunity for the Company. We continue to invest in research and development to accelerate innovation and expand IR’s value proposition for customers across the globe.  

Outlook and dividend

Due to the global uncertainty surrounding the coronavirus pandemic, Integrated Research decided not to provide any forward guidance for FY 2021.

The company declared a fully franked final dividend of 3.75 cents per share. This took the total dividend for FY 2020 to 7.25 cents per share.

At the time of writing, the Integrated Research share price is down by almost 14%, sitting at $4.22 per share.

More reading

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Phil Harpur owns shares of Australia & New Zealand Banking Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. The Motley Fool Australia owns shares of Woolworths 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.

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