Investors love it when their stocks hit new highs, but when other stocks push up into new price ranges, they become wary. Is it worth that much? Can it possibly go any higher? Will it crash down from here?
Those are some of the worries. We need to keep focused on the company, though. Can the business keep growing and make even today's price look cheap several years from now? You just have to be aware of valuations in share price and know the stock story.
ResMed Inc. (CHESS) (ASX: RMD) has had success with its new S+ product that monitors and analyses a user's sleeping and heart rate patterns. The company's breathing devices and respiratory aids have been used by health professionals for a long time, but the company has developed mobile apps that can be used with the S+ by average consumers.
The apps are designed to work on Apple iPhones together with the new Apple Healthkit. S+ products are also sold in some Apple stores. More mainstream customers may want to use the S+ hardware and app as part of their regular fitness program. That could open up a much wider market for ResMed's products and boost revenues. The stock is trading at 29 times next year's forecast earnings.
Premier Investments Limited (ASX: PMV) is close to setting a new all-time high. The fashion retailer known for brand names like Just Jeans, Portmans, Jay Jays and Dotti is expanding its Smiggle stationery store chain overseas. The popular brand has about 200 stores around Australia and Premier Investments thinks it can be a big hit in the UK as well. The company projects it could have 200 stores in the UK within five years and have annual sales of over $200 million. It has about 18 stores open currently, so there could be a lot of growth yet to come.
At 19 times next year's earnings, the stock is a little high compared to forecast earnings growth over the next two years, but it yields a healthy 3.9% yield fully franked, so the expected EPS growth and yield together make it a good buy.
