Why I think ResMed Inc. and Sydney Airport Holdings Ltd can keep beating the market

Credit: PressReleaseFinder

As the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) continues to post declines (we are now looking at almost an 8% decline year to date) a couple of shares just seem to have carried on their business without even batting as much as an eye, while other blue-chip shares like Westpac Banking Corp (ASX: WBC) and BHP Billiton Limited (ASX: BHP) crumbled around them.

Year to date ResMed Inc. (CHESS) (ASX: RMD) and Sydney Airport Holdings Ltd (ASX: SYD) are both in positive territory, posting returns of 9.9% and 2.7%, respectively for the period.

It should be noted that ResMed did post some spectacular quarterly results during this time, but even prior to the results its shares had outperformed the market and were up by 5%. In fact, the shares have been in positive territory since January 11 this year.

ResMed has a beta of 0.50 which could be partly to thank for the great performance. Wednesday was the biggest fall on the All Ordinaries this year so far, and we’ve seen many, yet ResMed’s shares climbed even higher, putting on another 1.75%. But asides from the beta, it is a quality company that analysts believe promises earnings growth in the low-teens for the next few years.

The shares of ResMed are still around 20% away from their 52-week high, which in my opinion shows that there is still a lot more share price growth ahead for investors despite the volatility of the market. The shares do go ex-dividend next week, so watch out for that.

Elsewhere, the Sydney Airport share price continues its ascent. Not as spectacularly as ResMed, but it is still beating the index by over 10% this year. Sydney Airport doesn’t have a low beta, but as it indirectly benefits from the low oil price, it should continue to outperform the market as long as oil stays at reasonably low levels.

Outside the oil price another factor could have made its shares attractive to investors. Last year Tourism Australia reported that in 2014 there were 840,000 tourist arrivals from China, up 18 percent year on year, spending AU$5.7 billion. They expect this to increase by 128 percent by 2020. The growth of Chinese tourism, that has been spurred by its growing middle class and rises in its disposable income, should mean more visitors coming through Sydney Airport and substantial increases in landing fees.

Foolish t akeaway

ResMed and Sydney Airport have been two of the best shares to own so far this year and I believe they will continue to outperform the market for the remainder of the year due to the earnings growth that lies ahead.

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Motley Fool contributor James Mickleboro does not own shares in any company mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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