Opinions
Kash Pashootan
ResMed Inc.
RMD-N
PAST TOP PICK
Jan 27, 2017
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)
(A Top Pick Jan 11/16. Up 33.32%.) This company deals with sleep apnea by providing masks and devices. The opportunity on this is that they are very close to a refresh cycle with their masks, and there is some pent-up demand waiting for the new models to come out.