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CSL Ltd stock and Resmed CDI (ASX:RMD) shares are 2 ASX shares to watch

The CSL Ltd (ASX:CSL) share price is up 1.7% since the start of the 2024. It's probably worth asking, 'is the CSL share price undervalued?'
The CSL Ltd (ASX:CSL) share price is up 1.7% since the start of the 2024. The Resmed CDI (ASX:RMD) share price is about 5% off its 52-week low.

CSL share price

CSL is a global biotechnology company that develops and delivers innovative medicines that save lives, protect public health and help people with life-threatening medical conditions live full lives.

The company is divided into three main business units: CSL Behring, CSL Seqirus and CSL Vifor. Behring, acquired in 2004, manufactures and distributes blood plasma products. Seqirus was formed by a rebranding of BioCSL and the acquired Novartis flu business (bought in 2015) makes flu-related products and performs pandemic-related services for Governments. Finally, Vifor makes products for iron deficiency and nephrology (renal/kidney care).

As previously mentioned, CSL’s plasma collection unit creates life-saving treatments for those will serious illnesses globally. CSL relies on plasma and blood collections to perform its primary businesses; and acquisitions are increasingly part of the CSL business. Investors often use CSL as an indirect play on rising spending on healthcare.

RMD share price

Resmed was founded in 1989 by Peter Farrell in Australia but is now based in San Diego, California. It is a medical equipment company that provides cloud-connectable continuous positive airway pressure, or CPAP, machines for the treatment of obstructive sleep apnea (OSA). If Resmed’s name or financial reports look different it’s because Resmed’s ASX shares are CDIs and its primary listing is the NYSE.

Resmed operates on a global scale, with 10,000+ employees and a presence in over 140 countries. It has two primary business units: Sleep and Respiratory Care, and Software as a Service (SaaS). Within Sleep and Respiratory Care, ResMed provides industry-leading CPAP machines for sleep apnea. Other devices are often marketed in this space but CPAP is the most effective therapy for all severities of OSA. The Respiratory Care unit covers patients ranging from those who only require therapy from CPAP systems at night to those who are dependent on non-invasive or invasive ventilation for life-support. Within the SaaS unit Resmed providers that assists durable or home medical equipment (DME/HME). Basically, it assists in out-of-hospital care.

Due to Resmed’s large digital health network powered by its cloud-connected devices, Resmed can leverage its industry-leading hardware (e.g. masks and humidifiers) and its SaaS data to drive insights, improve outcomes and reduce overall healthcare costs.

Share price valuation

One way to have a ‘fast read’ of where the CSL share price is, is to study something like dividend yield thru time. Remember, the dividend yield is effectively the ‘cash flow’ to a share holder, but it can be influenced by yearly or bi-yearly fluctuations. Currently, CSL Ltd shares have a dividend yield of around 1.26%, which compares to its 5-year average of 1.24%. Put simply, CSL shares are trading below their historical average dividend yield.

The RMD share price trades at a price-sales ratio of 5.12x, which compares to its 5-year long-term average of 7.81x. So, RMD shares are trading below their historical average. However, please do more investigating than a simple multiple like this. Our websites explain Discounted Cash Flow (DCF), Dividend Discount Models (DDM), and many different ways to value a share, like Resmed CDI.

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