With all the turmoil surrounding the ASX at the moment, it’s always good to remind ourselves that share investing is very much a long-term strategy. The share prices of individual companies can indeed be very volatile in the short term.
With that in mind, let’s take a look at the two best performing shares of the largest 100 ASX companies over the past 12 months. It just so happens that both of these shares operate in the healthcare sector.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
The Fisher & Paykel share price is up by 76.3% over the past 12 months, with a particularly strong run on the ASX since late August last year.
What is particularly interesting to note is while many companies are struggling due to concerns and implications of the coronavirus, the reverse is true for Fisher & Paykel. The company has actually seen an increase in demand from China related to the COVID-19 outbreak.
Since 20 February, where many ASX shares have seen major corrections to their share prices of over 10%, Fisher & Paykel has actually seen an increase in its share price of 5.5%.
The company recently upgraded its revenue and earnings guidance last month, driven by strong Hospital and Homecare sales. The company updated revenue guidance to NZ$1.2 billion from NZ$1.19 billion for the full year ending 31 March. Additionally, net profit after tax (NPAT) guidance was upgraded from a range of NZ$255 million – NZ$265 million to a range of NZ$260 million – NZ$270 million.
Fisher & Paykel recently noted that although some suppliers of raw materials are based in China, the company doesn’t anticipate any significant impact on current supply. In order to lessen any potential supply chain issues, many suppliers have expedited the supply of raw material to Fisher & Paykel as a manufacturer of essential medical devices.
Additionally, earlier in February, the company announced the launch of a new nasal mask for the treatment of obstructive sleep apnoea (OSA).
ResMed Inc. (ASX: RMD)
The ResMed share price is up by 74.3% over the past 12 months at the time of writing. ResMed has been growing at a consistently strong rate over the last decade and established a strong leadership position in the sleep treatment market.
The potential market for sleep apnoea is huge. It is estimated that there are one billion people impacted by sleep apnoea worldwide, with more than 80% of undiagnosed cases globally.
ResMed’s gross margin has been steadily rising, indicating increasing economies of scale. With this, the company is increasing the barrier to entry for new competitors.
In addition, ResMed’s ‘competitive moat’ is widening due to the reinvestment of a high proportion of its profits into research and development. It also plans to move further into the cloud-connected health space.
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Motley Fool contributor Phil Harpur owns shares of ResMed Inc. The Motley Fool Australia has recommended ResMed Inc. 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 Scott Phillips.
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