Site menu

Search by ticker code:
Generic filters

Menu

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

A deep dive into RMD shares

The Resmed CDI (ASX:RMD) share price is up 42.6% since the start of 2024. It's probably worth asking, 'is the RMD share price undervalued?'

The Resmed CDI (ASX:RMD) share price is up 42.6% since the start of 2024. Let’s take a look at why investors might be interested in RMD shares.

RMD share price in focus

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). Because of its US home base, ResMed shares have their primary listing on the NYSE but are also listed on the ASX.

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. 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 provides software 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.

The case for Healthcare ASX shares

The S&P/ASX200 Healthcare Index (ASX: XHJ) has returned 4.36% per year over the last 5 years. That compares to the average of all ASX sectors of 3.49% over the same period. So, here are some of the reasons that you might want to add a healthcare company like RMD to your watchlist.

Sticky revenue

Most healthcare falls under the category of essential spending. In other words, when times are tough, healthcare spending is one of the last expenses that people will cut.

Healthcare companies are providing an essential service that isn’t affected by commodity prices or seasonal demand, so their revenue tends to be a bit ‘stickier’ than other companies – i.e. it’s more consistent. In fact, healthcare was the best performing sector during the GFC.

Growth potential

In the US, which accounts for more than 40% of global healthcare spending, it’s estimated that healthcare profits will increase 7% per year from 2022 to 2027, reaching US$819 billion.

Healthcare is a rapidly growing sector in general, but within the healthcare sector there are certainly some sub-sectors that stand out. For example, companies providing IT and data solutions and ‘software-as-a-service’ (or SaaS) are expected to grow at more than 15% per year from 2024 to 2030.

The ethical investor

A recent Morgan Stanleysurvey revealed that more than half of investors plan to increase their allocation to sustainable investments in 2024. With the rising interest in ‘ethical’ or ‘sustainable’ investing, sectors like healthcare that provide important public services could be well placed to benefit.

RMD share price valuation

As a growth company, one way to put a rough forecast on the RMD share price could be to compare its price-to-sales multiple over time. Currently, Resmed CDI shares have a price-sales ratio of 5.12x, compared to its 5-year average of 6.13x, meaning its shares are trading below their historical average. Please keep in mind that context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric.

The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets. Both of these models would be a better way to value the share price.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

5%+ in passive income

Owen Rask’s investing report available

With bond ETFs like ASX:IAF and the S&P 500 riding high, now could be one of the best times to start earning passive income from a portfolio of shares and ETFs.

In this free analyst report, our Chief Investment Officer, Owen Rask, names 10 ASX stocks and ETFs to watch.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Skip to content