If you're looking for great buying opportunities in the current market selloff, breathing device manufacturer ResMed Inc. (CHESS) (ASX: RMD) should be at the top of your list. Here are three strong reasons you should buy ResMed today.
An attractive valuation
ResMed shares were sold down heavily back in May after the company announced a failed trial seeking a new use for one of the company's breathing device products. Since then shares have barely recoverd despite the company announcing an 8% increase in revenue and a 3% increase in earnings per share for the full 2015 financial year.
ResMed has a current price to earnings (P/E) ratio of 21, which is cheap comparative to the strongly performing S&P/ASX 200 Health Care index which has a P/E ratio of 27.
A long-term winner
The big healthcare companies have been a great way to smash the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over the last five years. Moving forward ResMed is also likely to be a big winner. The industry has natural tailwinds with the unprecedented shift in population demographics as countries like Australia and the United States get older and demand more care.
ResMed will continue to grow organically through product development and innovation, expanding into new countries and increasing public awareness about sleep apnea.
Resilient to volatility
ResMed's healthcare related products not only have a growing market, but are more resilient to the general economic volatility hitting markets at the moment.
Unlike industries which rely heavily on customers having disposable income, like retail or travel and tourism; healthcare (especially breathing!) is crucial for quality of life and people will spend money on healthcare before any spending on discretionary consumer purchases. So although the company's share price may go down with the markets, product demand, and thus earnings, should remain steady.
