This ASX darling's price is now 'most attractive in 5 years': analyst

This old workhorse has served investors well for decades — but there's more legs in it yet, say two respected analysts.

| More on:
person waking up happy and stretching in bed

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An ASX-listed company that's been a long-time favourite among investors still has plenty of legs, according to one fund manager.

T Rowe Price Group Inc (NASDAQ: TROW) Australian equities head Randal Jenneke said Resmed CDI (ASX: RMD) stocks are now ripe for the picking.

"The valuation is now back to its most attractive level in 5 years," he told a T Rowe Price webinar last week.

"The sleep business is about to start to improve. As the US economy [improves] and there's a product cycle to come."

Resmed is a maker of medical devices that aid respiratory issues, especially in the area of sleep apnoea.

The Resmed share price had already climbed 7.18% over the week to Friday's market close. At the start of the month, it was 2% down for the year.

The business has given its shareholders a great deal of joy over the decades. The stock started at less than $1 at the turn of the millennia and has provided excellent annual returns, especially in the last dozen years.

An oldie but a goodie

Sage Capital portfolio manager Sean Fenton told The Motley Fool that Resmed's an old favourite.

"In various guises, we've owned [it] for well over a decade," he said in last week's Ask A Fund Manager.

"It had a few blips here and there from quarter to quarter but generally did very well and continued to grow and lead its segment."

Fenton agreed with Jenneke that there was more to come from the US company.

"There's still growth in its target market of sleep apnoea and improving sleep outcomes," he said.

"[The company has] invested more and more in informatics and getting closer to the customer, and they really embedded themselves into having insurance payers and employing technology and improving their product and rolling it out."

According to Jenneke, the worst economic hurdles for growth stocks would be over this year.

"We see growth in inflation peaking in 2021," he said.

"What that means is that when we get into the later part of 2021 and into 2022, we should expect the market leadership is probably going to start to change."

At the time of writing, the Resmed share price is trading at $29.87, up 5.29%.

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Investor sitting in front of multiple screens watching share prices
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave the thumbs up to these ASX shares last week. Why are they bullish?

Read more »

Man with rocket wings which have flames coming out of them.
Broker Notes

These ASX shares could rise 30% to 50% in 12 months

Big returns could be on the cards for owners of these shares according to analysts.

Read more »

Digital rocket on a laptop.
Broker Notes

Is the Nvidia share price on course to reach US$1,400?

You betcha, says one analyst.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Lithium and cheese: Bell Potter tips 20%+ returns from these ASX 200 stocks

Big gains could be coming from very different sides of the market.

Read more »

A smiling boy holds a toy plane aloft while a girl watches on from a car near an airport runway.
Travel Shares

Why Qantas shares could rise over 50%

The Flying Kangaroo's shares could be dirt cheap according to one broker.

Read more »

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices
Broker Notes

Morgans names 3 ASX stocks to buy following results

Here are three stocks that Morgans is feeling bullish on this week.

Read more »