Opinions
Colin Fisher
ResMed Inc.
RMD-N
WATCH
Mar 16, 2016
Stock price when the opinion was issued
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(A Top Pick Feb 11/16. Up 24%. Up 24%.) Sleep apnea is such an unaware market. 26% of the population have it, and the penetration is less than 15%. Last year, there was a lot of built-up demand for the masks that they create, because the new line was being rolled out. They’ve rolled out the new masks, and there has been more demand than had been expected. The dividend is just under 2%. He is continuing to buy this.
18 million Americans have sleep apnea with many others undiagnosed. They have 2.5 billion nights of medical sleep data. They take cases out of hospitals and into homes. Based in Australia and the U.S. Shares have been been steadily rising. (1.3% dividend yield, Analysts' price target $109.75)
RMD provides cloud based digital medical devices to assist with sleep and respiratory monitoring and treatment — a steady and reliable business model. It trades at 26x earnings and supports a respectable ROE of 25%. We like that cash reserves are growing, while debt is retired and shares bought back. We recommend setting a stop-loss at $190, looking to achieve $271 — upside potential of 22%. Yield 1.0%
(Analysts’ price target is $271.71)
Some of the shareholders are super bright buys. They have a good shareholder base. They had a bit of a failure to launch. They don’t have a long shelf life. You have a more activist board that are shaking the tree. It is going to have prospects. He wants to see something happen with their capital.