What?
The share price of ResMed Inc. (CHESS) (ASX: RMD) continues to defy gravity, surging nearly 3% yesterday to hit a new all-time high of $9.41. Long term shareholders in the sleep apnea device maker are sitting pretty following a stunning 101% rise over the last 12 months boosted by a falling Australian dollar and continued operational excellence.
Why?
Analysts and economists have been forecasting a fall in the Australian dollar for the last two years. Companies that have a significant portion of revenues from overseas, or report in US dollars, benefit because they report higher Australian dollar-denominated earnings.
In addition to this, ResMed's senior management team is making the right moves to consolidate and grow the company's position in the global sleep apnea device market. ResMed's products include airflow generators, nasal masks, and purpose-built pillows. They treat deadly conditions and other respiratory problems by introducing the airflow needed to keep open patients' respiratory pathways during sleep.
The company also reinvests a significant portion of profit in education and research to grow the market, increase awareness of the disease, and develop the next generation of products.
Is it too late to buy?
The best companies ALWAYS look expensive. The likes of Ramsay Health Care Limited (ASX: RHC), Amcor Limited (ASX: AMC), and Domino's Pizza Enterprises Ltd. (ASX: DMP) have been three of the most 'expensive' companies on the ASX for many years, but have remained some of the best performers, year after year.
ResMed is another company in this category, and offers investors an entry point into a growing, global market that is dominated by two main players – ResMed and Philips Electronics.
ResMed has shown incredible resilience so far and is in prime position to be a larger and stronger company in five years' time.
Analysts are expecting a 17% rise in earnings per share this financial year, and a further 12% in the 2016 financial year. While this will make little impact on the dividend yield, it will allow the company to develop new products and hopefully increase market share.
